I favor Sen. Warren because she can claim authenticity: brought up poor, a mom who rose to distinction in academia. She has worked tirelessly for economic fairness but she knows that capitalism has to be tamed and regulated. I think of her as the political heir to FDR, who saved capitalism from its own excesses.
Of all the Democratic candidates, she has the greatest chance of connecting with working families, even union families, who voted for POTUS.
559
Do you believe people should strive to pull their own weight in this country? Is it your hope that you give more than you take or you prefer that Ameica subsidize you.
I seek governance that provides an environment where I can be independent. Where I can get a pay check over a welfare check. Where I can make a good wage based on my merit and not because a minimum wage is mandated.
My parents and I paid for my college.
I like the economy now where good jobs with good pay are in abundance in part because corporate taxes and regulations are being cut.
I would be ashamed to have other tax payers pay for my health care or my Childrens education. I am proud to pay taxes through my direct wages and the corporate taxes the companies in my retirement saving pay.
6
@John
Exactly which jobs are in abundance because of lower corporate taxes and cuts in regulations?
Please name the industry or job sector where this is occurring.
162
@John "My parents and I paid for my college." So did I, sans parents. I got an undergraduate degree in zoology from the University of Minnesota from 1971-74. Tuition ranged from $525-683 per year; I earned eight to nine dollars an hour working at the U, 20 hours a week during the school year, 40 hours a week during the summer. I took an extra five credits every quarter (tuition was capped at 12 credits), got my degree in three years rather than four and graduated free of debt. Tuition at UMinn is 14,760/yr, on-campus jobs pay about what I was earning.
There's a lot about the younger generations I'm uncomfortable with, but the bottom line is that they're getting reamed by college costs. It's immoral, and it's a drag on society and the consumer-driven economy.
Times change. We have to change with them.
246
So what are Republicans up to with the spending bill?
If a Democrat is elected President, then it is a trap. Republicans will use the resultant deficit to push devastating cuts to all things not defense. Democrats will feel tremendous pressure to agree to spending cuts, especially if the yearly deficit explodes (+$1.0 trillion) caused by a recession and Republicans refuse to increase taxes on the wealthy.
If a Republican is elected President, then it is an opportunity. The resultant deficit will be used to justify devastating cuts to all things not defense especially if the deficit explodes as discussed above. Democrats will feel tremendous pressure to vote with Republicans or risk placing the country on a path to financial ruin - that will be the Republican rhetoric. Of course, the real cause of the crisis will be Republican tax cuts in 2018. However, most voters will blame Democrats for the mess – that’s how Republican mojo works, Republicans are never held accounted for the mess they manufacture.
So Republicans benefit regardless of which party wins the Presidency because the spending bill will create the dynamics which allow them to achieve the spending cuts that they have longed for since Reagan.
The only possible way out for Democrats is if Democrats control both Executive and Legislative Branches and are willing to raise revenues by taxing the wealthy.
62
War is peace......
2
Similar experiments are on the go right now in several Canadian provinces. Massive corporate tax cuts, be driven through with gusto and promises of investment. Then squirrelling around to try and balance the budget by... um... how about making colonoscopy patients pay out of pocket for the anasthesia?
Our federal election in the fall could bring the same to power in Ottawa. Eek.
7
The Chickenhawks, Bush and Cheney, orchestrated a preemptive attack on Iraq based on the (illusory) fear that Saddam would kill our babies with his vast arsenal of WMD. Their idiocy resulted in the destabilization of the entire ME.
Now we have The Fed initiating preemptive interest rate cuts based on the (far more likely) fear that GoodBrain will kill our babies (well, economically, anyway.) with his vast arsenal of ignorance, possibly destabilizing the entire global economy. Results TBD…
How about we just stop electing (R)egressive presidents?
7
Is anyone checking on whether Trump is shorting stocks before he makes his latest statement on new tariffs against China? Just sayin'......
13
The NYT and Mr. Krugman have to ask this question?
The answer is simple and has been self-evident for decades to most New Yorkers ...the donald is a terrible businessman!
Always has been, always will be. Look for his new book, "How to become a millionaire" start with hundreds of millions given to you by your Father, then invest and mismanage like the donald!
He's done it for his own businesses, and now he's doing it for America and his MAGA Mob.
10
it's a global supply chain world predicated on made to order, JIT and PRC sourced manufacturing - tariffs killing US companies (not just a pass thru to US consumers) esp. US companies with slim margins to begin with.
Its working for his donors. That's all the gop really cares about.
6
The Republican Party is a Kleptocracy, pure and simple.
Coddle the rich, demonize the poor, grab all you can.
19
Trumponomics was a flop because Krugman says it is, and he's the self-appointed king of economics.
2
Points for persistence. Puffessor K wants us to believe him, not our lying eyes
3
What republicans exist for is the next time they can get close to the treasury to rifle it. How many times does it have to happen before it becomes obvious even to their voters? As disproportionate as it always is the Supply Side promise is never any better than what the economy was trending to during the Obama administration. They don't seem to be able to win a Presidential election by popular vote lately which is the reason for all the scams they use to get votes. Winning the Presidency via Electoral College is depriving Americans Democracy ...the very definition of it. The list of dirty tricks is well known to some of us who pay attention it only begins with gerrymandering. The recent McConnell betrayal is nothing but a demonstration of how desperate republicans have become, resorting to whatever works because ...they don't represent us, the Great Majority of us.
Republicans are headed to the endangered species list then onto extinction. How long can the monopoly on Patriotism bamboozle be spoon fed to a critical mass of gullible believers? Its actually dems who legitimately can scold that you should leave America. Why? Because they actually have our interests in mind, not as a by product of enriching the trickle down fraud. I'll finish with that, you're being accurate to believe the GOP is Pro Pollution too. Let us count the ways and the voting record.
2
Isn’t it nice to be Krugman having so latitude in skimming over several decades of presidential economic policies by only pointing out a selective few examples.
If mentioning that Bill Clinton eased policy for home ownership that was the acorn seeding the 2008 mortgage crisis or perhaps his ushering in NAFTA, then freedom of the press allowing him to omit information is alive and well.
If Enron equates to GOP failures of the 1990’s, then opinions from such well revered economists like Krugman always have opportunity to exclude their biases and would speak of Democratic failures they supported like WorldCom and more recently companies like Solyndra Inc. and Abound Manufacturing Solar LLC, however Krugman is free to keep his opinions as biased as he likes...
What we're seeing at the moment are hyper inflated stock & bond prices that seem to be based on "everything working perfectly". I don't think that is a reasonable economic outcome. the central banks have very little ammunition to stimulate the economy. The US is deficit spending, unemployment at 3.75%, with major tax cuts in effect & GDP growth is 2.1%! Really?! I haven't seen any predictions for growth to accelerate beyond that. I think Dr. Hunter S. Thompson had things right when he said; "when the going gets weird, the weird get going."
3
Trump has told us, any number of times, that he is the master of debt. Just this once, and for him personally, this is not a lie. I recall listening to a UK radio program, years ago, when one of the callers said: "Tell me what has happened to £10,000 borrowed and £10,000 invested over the past ten years." This was at a time when the housing bubble in London and the SouthEast showed no sign of collapsing. The same has happened in Trump's backyard of NYC, and that's how he has made his money. Put down $10 million, borrow $90 million, buy yourself a tower somewhere. When the price doubles, sell it, pay the investors maybe $120 million - they'll be happy - and pocket the $80 million pure profit on your investment. If it doesn't work, declare victory - sorry, I mean bankruptcy - and walk away. Trouble is, he sees debt as working for the country.
6
As a sole prop for my business, I took a big hit in taxes for last year - almost double what I had been paying prior to that tax cut for the rich. Hops those folks "struggling" in the 1% enjoy more of my tax money so they can buy a designer handbag, shoes...
9
To call Mr. Krugman's analysis "hate" a little strong and a lot wrong. The deficits are exploding, so financing the tax cut falls on general public. If and when the debt is reduced we the people will pay the bill with tax revenues. Tariffs thus far have not worked for a President who promised trade wars are easily won. We the people paid out thus far at least 16 billion to farmers who lost sales of soybeans, corn and pork to China. The unknown concerns whether China returns to purchases from USA farmers or stays with suppliers currently helping them out once Trump "wins" the trade war.
Companies did not invest the tax savings rather they did in fact purchase shares of their own stock. The nominal effect increasing the value of fewer shares.
Finally, the economy and stock market began to increase in 2010 and continues under Trump along the same path. The same for job and wage growth. Hate, like I said is a little strong.
4
On a different note inspired partly by Trump and by a recent FBI raid in Los Angeles a few weeks ago, but what is the impact of all this foreign investment in our real estate, both commercial and residential? I find it concerning since so much of a paycheck of a person in this nation goes towards housing. However, is this an issue of concern, or am I being silly for being concerned? I have not looked into any research on the matter, regarding its impact on our economy.
2
Most low income white Republicans know Republican economic policies do not help them and may hurt them. They vote Republican because of their hostility for non whites.
21
@John Engelman
I don't agree They mostly don't vote Republican, they don't vote. 50% of all wage baring white voters do not vote. Trump lost more of that vote in 2016 than Mittens did in 2012.
@John Engelman
I think "most" is a bit strong here. Although racism is still a big problem, I don't think that is the only reason why Trump won.
Those people do exist for sure, but I think it is also partly that many who make up Trump's base don't trust government, so they more easily buy into the GOP false talking point that capitalism works like a magical perpetual motion machine that does better when left alone, free of regulations, when nothing can be further from the truth.
When capitalism is left alone. and unregulated, we tend to get exploited workers, pollution, and huge bubble and bust cycles, a wealthy few, like the Robber Barron's. A bubble and bust caused the depression and the most recent great recession. These downturns were fueled by a "hands off" policies.
The other major reason, and this is probably the biggest one, is the abortion issue. When a person believes this is wrong and their religion also confirms this for them, then they often feel they have no choice but to vote for a pro-life republican. People have a right to their beliefs.
If abortion was not a political issue, it is hard to imagine the republicans ever holding a majority or the office of president again, with their present policy proposals, because a lot of their ideology, like when it comes to helping the poor, are rather unchristian in nature.
6
@John Engelman
"They vote republican because of their hostility for non whites." Oh, yes, they are racists.
3
The economy may appear to be good, but we are collapsing industrially as our infrastructure lags further behind 1st world countries as 'K' often points out.
9
The economic downturn has already begun. I am seeing the same sheet I saw in 2000 and 2007. Respect the cycle and forecast its demise via debt contraction. US centric, US junk bond markets are a mess. The Auto industry is essentially imploding but even the announced layoffs have barely occurred yet as production is done early in the year. As layoffs rise, junk bond markets will implode. Stopping buybacks next year and causing a tech implosion to follow. This will all happen closely together.
UK default would add another layer of economic contraction on the menu. Trump's policies have failed as all Republican policies since 1865. Its all debt and nothing more than debt.
5
So tax increases work? Lets give it a try. Let's tax everyone by an additional 20% and do Medicare for All. While we are at it let's provide free college by taxing another 5%.
Who is in?
2
Lets tax the super rich (they do not spend it) close loopholes (which lowers taxes for corporations), and have corporations actually pay the same rate they do in other countries, about 27%.
If this is the plan, I'm all in...
13
Trump’s $1.5 Trillion tax cut got me nothing but debt.
You want to compare that to a plan where I end up with health care and college all paid for.
Was this supposed to be a hard choice? Because getting something will always beat getting nothing but debt IMO.
6
@robertb
Not even close to the amount of money needed. Average tax rate and VAT in the EU is close to 60%
What is more alarming is the slowdown in the housing sector. The most recent Interest rate cut by the Feds has not given it a boost.
7
The goal of tax cuts for large corporations is tax cuts for large corporations.
Or at least the size that can buy influence.
5
Seems PK is turning soft on us, as he says: "Trumponomics has utterly failed to deliver on its promises, it’s not bad enough to do enormous damage." What, did my eyes deceive me? So all the wonderful actions taken by Trump is okay because it has a small effect to our nation's economy: The $Trillions increase to national debt, the continued borrowing by Minchkin to pay its bills, the Fed lowering rates to supposedly have us believe it will help to keep our economy strong, the continued spending by the gov't when no funding is there, trade tariffs that inflate prices that consumers ultimately have to bare, families with 2 or 3 jobs to meet their credit card debt, must I go on and on? As long as we can continue to do the accounting gimmicks then it is best not to correct or improve our short comings, but keep everything at status quo, right PK? It would nice if just one thing, just one an only one major thing could be corrected, it would make my day: no longer can corporations park profits in tax havens, off shore accounts, move dollars from one country to the next to dodge their responsibility of paying taxes. What was it that the SCOTUS said: corporations are citizens, are people. Well, then tax them like us and I.....individuals. Do away with the tax bracket for corporations.
1
Why does the GOP continue to back their thoroughly discredited trickle down, sleight-of-hand economics? Because they're doing the bidding of their big contributors, and are simply devoid of any other ideas.
9
I have seldom seen anything Krugman write actually prove out in real life. Oh well, that’s true of virtually all economists - so I guess Krugman is normal.
2
You should actually read the article. He was clear on real historical data, what works and what does not work...
5
I have always said: "we all work hard but some of us are paid more for it."
3
As they say, you have to follow the dollar.
What this means to a moderately educated person like me is that you have to think, if there is a tax cut or spending in certain areas, what will be the outcome and what would have been the outcome if things had been done differently.
This article makes this point
Dollars spent and taxes cut can have vastly different impacts on the economy depending on where the benefit goes
For example, less taxes from a paycheck for lower income people generally results in them spending those dollars in a way which boosts the economy because they tend to spend a much higher percentage of their incomes in the economy. The dollars they spend then can become income for another who will also spend more, etc. This has a multiplier effect
This does not generally happen when a wealthy person, who already has enough to spend for their wants and necessities, gets a tax cut. They tend to invest the excess and this does not necessarily translate into more jobs. Only demand can boost production, jobs, and an increase in goods and services
So, investment going into stocks and other assets tends to simply drive up stock and real estate prices, etc. This is fine for those with money in stocks or real estate, but not so great for everyone else
In addition, an investment in needed infrastructure drives up wages and demand for goods and services
So, infrastructure spending and helping the middle class and lower income folks has a much better ROI for GDP
8
The biggest Republican political marketing coup over the last 50 years, beginning with Reagan, was convincing the middle and working class that only receiving a "trickle" from corporations and the wealthy was a good thing.
Even calling it "trickle-down" economics was and is the ultimate Republican trolling: It is as if the middle class is figuratively standing beneath the deck at a party at a posh Hampton's beach house, lapping up the "trickle" of drinks spilled from above.
10
I will happily pay higher taxes if you forgive my student loan debt.
4
@CM
Forgiving and/or reducing student loan debt for the middle and lower class would be a fantastic investment for our government to make. We need to get rid of the tax cuts for the wealthy, and make the investments where it can do far more good.
3
@CM -- My heart goes out to students with debt and I am sure you would be happy to pay higher taxes. That our children and grandchildren can be strapped with $100k or more in debt is appalling.
It appears that some parent(s) are unable or unwilling to help their kids with the expense of higher education. Regardless, that child did not ask to be born and deserves to have an equal opportunity just as many others have in this country and other countries. There is much truth to the saying "it takes a village to raise a child."
1
@CM
Only for people who need the money. Not funding Jamie Diamond's kids.
The tax cuts were supposed to pay for themselves. They haven’t. Add this to the long list of Trump whoppers like a better health care plan than Obama’s and upgraded infrastructure. America are you tired of being lied to?
12
Paul, I think se both know that the GOP doesn't really believe that tax cuts will grow the economy.
Rather, they simply want to help the greedy, cynical faction of the rich to 'welch-out' of the social contract.
Frankly that faction hates the members of the poor that aren't in chains.
4
LOL. you gotta hand it to krugman. He has been wrong almost every time on anything Obama or trump has done, yet he continues to opine. The question is why anyone reads him.
2
So why do you?
2
Trumponomics is simplistic, bombastic, and based on the ever-whining absurdities of conservatism. Conservatives routinely dredge up some old policy as a new policy, and Trump's bizarre trade policies are a case in point.
The conservative policy for any situation is invariably to make a bad situation worse with obsolete ideas. Think of Prohibition, a total failure, and its dismal grandchild, the War On Drugs, which has bankrolled organized crime for decades. The conservative policy position has never moved at all despite obvious failure.
Conservative politics always go backward. There are no forward-looking components in this mindset. This incredibly disingenuous approach to global trade, for example, could never work, yet it will inevitably be a "precedent", like Reaganomics, for conservatives in the future. A return to the Good Old Days of Trump will come as sure as the hackneyed statements of conservative nobodies infest the media every generation.
The world in which these policies were created and failed no longer exists, but the policies are still articles of faith for conservatives. Trumponomics is a How To manual for preordained (premeditated?) failure.
Can't agree about "no recession". If the finance sector creates yet another corrupt, insanity-based financial crisis and the ultra-regressive Trump trade policies start to impact global trade, it can happen. Just look at the decision-makes; all else follows.
5
The economy is working for Trump. Look at how he lets shares rise then suddenly announce a new tariff measure to make them fall when they peak. It’s getting REALLY predictable now!
5
Professor Krugman is either right or wrong; I believe in the latter. This is just one of Paul's typical opinion pieces that tries to make a point, yet again it lacks any proof other than the one megaphone anybody in the government or who relies on their grants for their jobs use, to provide evidence to back up his opinions. The overall growth in jobs and wages indicates that the President's policies are working. No strategic or fundamental changes made in Federal programs or ideology won't have it's pains; but something had to ignite job growth here in the US.and to shake up a moribund institution. -Steven Pettinga
2
@Steven Pettinga -- what about the growing debt? With the exception of the economy collapse during Bush II, we have had tremendous job growth during the Obama years. The fact that job growth has not stopped (yet) under Trump does not a genius make. I am of the belief that as long as Republicans do not see another Bush II collapse they will continue to pat themselves on the back. The bar is low these days.
5
What a great question--"Why build a manufacturing plant when, for all you know, next week a tweet will destroy your market, your supply chain, or both?"
Trump's modus operandi is chaos, unfortunately, and the instability of the financial markets can be attributed to his erratic behavior inspired by his dopey belief that tariff wars are easy to win and will be paid for by the countries hit with tariffs.
13
SSDD!! Ever since Nixon put ceilings on fuel prices and wages, the story hasn’t changed. Republicans screw up the economy, and Democrats clean it up. Wash, rinse, repeat.
BTW, Nixon screwed up health insurance too. Wage ceilings led to employer-based insurance. When everyone bought individual/family plans on the open market, everyone had equal access. So we need a Democrat to fix that too.
6
“After the shock had worn off”? I hate to tell you, the shock has not worn off. Everyday,after reading the NYT, I feel as though I’ve had another jolt of shock
6
Regardless of your hate of Trump, the economy hasn't been this good in years.
21
@mrmeat
and what has Trump - or any republican - done that has contributed to the health of the economy? The $1.5 Trillion tax cut has not had an effect on the economy- except that it gave corporations the cash to buy back theri own stock. This increased the price of the stock whcih meant the executives who were paid in shares of stock just got a windfall. The stock market also rose as a result.
Did this help anyone no in the top 1%? No.
So, you are only partially correct.
You should have said: the economy hasn't been this good -For the Upper 1% - in years.
68
@mrmeat
If you read the article, it actually doesn't involve hatred of Trump. It's a fairly level-headed article about how his policies don't make much sense. Which he is also careful to points out is not the same thing as saying the economy is bad. The economy is good and his policies are not good at the same time, which isn't such a shocking statement. A lot of factors drive the economy, of which the current member of the Oval Office is only one small piece (of course, Trump wishes he had more influence, such as being able to slash interests rates on his own).
59
@mrmeat. If you run a small business, you know that other than a tighter labor market, and excessive rump induced risk in every expense item, particularly in insurance costs,there is nothing different in the 2019 economy than 2015-6 and the trend started in 2009.
34
the Anti-American Party, formerly (a long time ago these days) Democrats desire to wage civil war on the bedrock principals of the United States. They seek to destroy the notion that US citizens are generally honest, hard working, resourceful, capable of almost anything, and self sufficient and replace it with a country of endless victims in need of government assistance and grievance resolution. Wake up -- Democrats if that's what you want to be called, the US is not a nation of incompetent victims.
2
Making the rich richer also makes the poor poorer. It should be evidence.
4
I thought Republican policy was to cut both taxes and government expenses. Trumponomics is running trillion dollar deficits and bragging about best employment rate in 70 years.
5
Totally disagree with Krugman's premise.
The economy right now is doing great Krugman.
The Fed lowered rates because we are in a trade war with China. Not because the economy is halting or will slow down.
The interest rate drop will lower the value of the dollar. That would force China to drop the yuan lower. China and our 'friends' in Western Europe artificially lower their currency to keep their products competitive. We are now doing the same thing. The lower the Fed rate the faster our 'trade war' with China will end.
Another slanting of facts to denigrate President Trump.
3
@Frank -- the Fed lowered the rates to soften the damage that Trump is doing to our economy. Frankly, I think Powell just threw in the towel after Trump disparaged him these past weeks.
1
164,000 new jobs this month. Continuation of steady growth. Unemployment rate at a historic low. Labor force participation creeping up. "Trumponomics" is not a flop.
If Mr. Krugman weren't such a closed-minded partisan, he would try to explain this. Maybe it has nothing to do with Trumpian economic policy; maybe that will turn out to be disastrous in the end. But so far, on the basis of the evidence, the economy is doing better than it has in several decades and cannot be a basis for attacking Trump.
5
I get tired of the unreflective credibility granted to Republican lawmakers when talking about the economy. Time and again we'll hear Republicans running for office or promoting a policy say something like "I know how to juice the economy, really get things going," and all that ever means is tax cuts for the wealthy, and/or eliminating regulations. These things don't work but they are accepted as truth -- and I wish whoever is sharing the stage would call them on it.
10
But here is the problem the Trump economy is not that much different than the Obama economy . Both were dependent on large amounts of deficit spending. Both have seen solid but not always spectacular wage gains. Though Trumps has been better. Whether that is a continuation of Obama or the tax cuts have helped is probably something economists will debate for years now.
What Professor Krugman leaves out is that deficits were going to increase after Obama left office which it has. And that it will continue to go up due to increased entitlement spending.
Jerry Brown's tax increase may not have doomed California's economy but California has some of the nations highest rates of poverty and homelessness.
1
"Imagine how much better shape we’d be in if the hundreds of billions squandered on tax cuts for corporations had been used to rebuild our crumbling infrastructure."
True: it's very likely that many jobs would be created through a practical infrastructure progrma, in supply, management, construction, administration, etc.
Instead, what you got was fairy tales about wealth trickling down.
7
@Dip Can you say, Solyndra?
Can you say billions of taxpayer $$ to subsidize farmers hit by tariffs?
7
Erasure of Amazon's new HQ in New York by AOC and others stroke everyone's mind so strong that nobody would listen to what you're saying anymore.
There are many invisible economic activities in the world like that. Companies are very movable beasts these days. You have to make them comfortable in all possible ways to place them in your place otherwise they will leave to better ones like birds! It's harsh competitions even among countries.
And, it's very funny you are just talking about tax and tariff. Look at enticing materials from mayors of the candidate cities which desperately wanted to invite Amazon to their cities. You never sold any thing to anyone, right? The real economy is not that simple and easy, boy aged.
1
The policy zombie also eats the brains of moderate democrats, who in fact are conservatives. That is why the democratic party has and continues to move to the right. They believe the GOP arguments are correct.
2
It seems clear today that Trump pushed for the interest rate cut so that he could "safely" impose higher tariffs on China. There is no "policy," though beyond short term gains that Trump thinks he may achieve. There are in fact no achievements except to make the rich richer while throwing a small bone to the middle class. In fact, I argue there is no such thing as Trumponomics, if only because Trump has no coherent policy.
3
@Barbara. “ it seems clear” - no it doesn’t. Apparently you knew the trade talks would get put on hold. And by the way, we’re all getting richer.
@Jackson
Some are getting richer, myself included, but many are left behind. While I had no inside knowledge, Trump certainly did.
1
https://www.nerdwallet.com/article/how-your-net-worth-compares-and-what-matters-more
Household median wealth is under $100k.
Obama's greatest failure was not touting his successes enough. The result? Trump the Charlatan came in and quickly claimed Obama's successes...calmly guiding the US economy back on the rails while ratcheting down the war fever of the Bush years...as his own. Trump claimed the unemployment rate under Obama "...is probably 28, 29, as high as 35 [percent]. In fact, I even heard recently 42 percent." Now Trump forgets his old number and lays claim to the downward trajectory started under Obama.
Democrats need to be better at claiming their successes and labeling Republican failures. When was the last time a second term Republican had economic success? Even Reagan and his trickle down economics brought the market crashing down in 1987 and Bush tried to top that failure in 2007 into 2009. Money flows from the bottom up not the other way around unless you are in the yacht, private jet or other luxury business.
5
Trump does not operate in the real world. He operates in the Fox dimension of false, conspiracy theory manipulation propaganda. Of course nothing he does works in the real world. It is only useful for entertaining Trump's Fox dimension reality tv audience.
3
The choice is between people who legitimately make money get to keep to put it back to work, save it, or do with as they wish of they fork it over to the crowd we saw on the stage during the recent primary debates.
On a personal note. The morning after the 2016 election, while Mr. Krugman was predicted big market sell off, I, being cash long on account of presuming big Hillary win, loaded up on SP500 indexes and some bank stocks. I take the cash, you keep the Nobel.
1
American economy reminds me of a plane flying higher and higher while everybody is cheering...What happens next is a high altitude stall and the plane will need a good pilot to recover...
4
Trumponomics didn't work for a casino or a business college either, most often as not so long as Trump can hire a lawyer to sue someone, money can be made.
However that's not going to work with business's outside of this country.
2
Barack Obama and his administration pulled off one of the best executed and most difficult economic tasks in American history, pulling the crashing economy up from disaster in 2009, which then led to the long recovery which we still enjoy. He got almost no credit for it.
Why? The blast force from the Republican and right wing oriented propaganda apparatus was so strong that some people actually believed Obama made the recession worse because it was heading downward when he took the oath. (Guilt by association.) Furthermore, Obama and his top aides did not lead the country along in appreciating the depth of the danger faced and the success of the recovery. Instead, they turned immediately to health care insurance and were buried in negative news coverage and endless arguments in Congress.
Now, Trump gets credit from his true believers because he, Trump, says over and over again that he personally is making the economy roar. Trump uses the megaphone of the White House, and the major media play along, to constantly talk about how great he is (when he is not otherwise attacking someone). The power of belief is stronger, much stronger, than the power of fact. Perhaps many people got turned off to dealing with facts when they were in school: too much trouble?
A recession is creeping toward full bloom. It is likely to be registered in statistics by the end of this year and confirmed further in 2020. What will Trump say then? Of course, it will be someone else's fault. Hillary?
5
@Doug Terry
"...pulling the crashing economy up..."
Maybe. Maybe it depends on your analytical tools.
The traders on Wall Street make their billions by more accurately predicting the economic future a nanosecond before their competitors.
In 2008, Wall Street traders predicted that Obama would:
1) become president;
2) enact a huge tax increase on small business by forcing the Bush2 tax cuts to expire;
3) socialize medicine, increasing its cost by $1 trillion;
4) increase federal regulation to over 190,000 pages.
Easy predictions to make, Obama was promising to do these things starting in 2007 when he declared for president.
When Obama’s probability of becoming president went to 50% (Iowa Political Markets), the stock market crashed $2.5 trillion. As it went to 100%, traders crashed the market by $8.2 trillion.
Those predictions? All correct.
Obama's policies resulted in only 13% growth. The lowest growth of any two term president in U.S. history.
There will always be shocks like the housing market - a $6.2 trillion shock. In 1987, Black Monday hit Reagan with a 22% hit to the stock market, the modern day equivalent of a $7 trillion shock.
Impact on Reagan's economy? GDP growth in 1987? 4.2% GDP growth in 1988? 3.6% Reagan's economy took the shock in stride.
Obama's economy? GDP growth in 2009? -2% First president not to have a 3% growth year since Hoover.
That wasn’t Obama’s economy. That was Bush’s.
4
Is somebody actually trying to talk about GDP growth in 2009?
5
“On the other hand, think of the missed opportunities. Imagine how much better shape we’d be in if the hundreds of billions squandered on tax cuts for corporations had been used to rebuild our crumbling infrastructure. Imagine what we could have done with policies promoting jobs of the future in things like renewable energy, instead of trade wars that vainly attempt to recreate the manufacturing economy of the past.“
Isn’t this the exact same argument that AOC made when arguing for pushing against Amazon’s HQ2 and all the tax credits that they’d get? Every economist, including Mr Krugman here, harped on her for being intellectually dishonest. I understood her at the time, and it appears as though Krugman also agreed with her all along, but his ilk just doesn’t like it when people like her say it.
I waver between optimism and pessimism, because I'm a problem solver. I think that's the way we are, and our internal struggles push the world forward.
So I want to harpen back right now to something I mentioned a long time ago, that I believed that offshoring was stifling innovation in automation.
True human innovation requires massive automation. It should never be discouraged even though it sometimes leads to the dislodging of employees.
But we should not have been replacing US emplyees with foreign employees to serve US customers. That should have required robots.
By forcing this be proportionate to sales, we force technical innovation that leads to automation. Automation improves all lives if it is shared properly.
I'm also an advocate of something I call proportional immigration. That is, we should allow and encourage people to immigrate to the US in proportion to labor pools. This prevents the distortion of labor markets that caused the current perceived shortage of tech workers.
Trump has NO “onomics”. He is an individualist, self serving autocrat with no interest in economics as a function of good government. Tax cuts for the “wealthy” class was conceived as economic strategy for “we the people” by Reagan and when trickle down combined with deregulation became a hostile corporate takeover, tax cuts became a game of robber barons stealing democracy (as a fair & sustainable distribution of wealth and resources) from the people. Trump is this scenario at its most corrupt. Economics, as conceived by Enlightenment thinkers like Adam Smith, Marx and others in this path, is absolutely a tool for governance, for making a functional and democratic republic. Trump is part of an organized crime network, an enterprise very much apart from the people of this nation, he represents corruption at a level of non-government, and his usurpation of our institutions and our identity rooted in democratic ideals.
3
Yesterday The Economist sent me an offer I almost couldn't refuse. The Economist is the bible of economics journalism and I could get a 12 week complete package for twelve dollars, a dollar a week.
The Economist has been around for a long time in 1845 they championed the mass starvation that culled the bottom 20% of the Irish population to allow the serendipitous potato blight do what Swift's Modest Proposal was meant to do 125 years prior to the blight and give economic value to the valueless.
Economics is not science. Science is about what is and doesn't or shouldn't be involved in human values, ethics or understanding. Science is about numbers and the numbers are not good, bad, or indifferent they are just numbers.
I have no idea what Trumponomics was designed to do but it was designed to do something even if it was simply meant to further divide the country or question the value of democracy in a country that still determines worldwide societal evolution.
My own ethics and values inform me what "We hold these truths to be self evident that all men are created equal and endowed by their creator with certain inalienable right among those life, liberty and the pursuit of happiness" means.
In 1964 those words were put into law with The Civil Rights Act as discrimination on the basis of race, colour religion, gender or national origin was made illegal.
Today's GOP was born in 1964 to make sure those laws never were made a reality.
How was Trumponomics unsuccessful?
2
Trump kinda walks behind the economy and gooses it just enough to keep it going at a brisk pace but at some point there will not be any more interest rate to cut and the deficit will be at the limit of credibility while the defense industry will demand more and more borrowing and demand generally will have dried up from having been siphoned off into the bank accounts of the top 1/10th of 1%.
There's way too much "ruin in the nation" of America, as Keynes would say. If Trump gets re-elected it will be because he has pinned the ruin on democrats. One can see some ruin in the health industry in Emmanuel's contribution to the Times today here:
https://www.nytimes.com/2019/08/02/opinion/democrats-health-care.html?action=click&module=Opinion&pgtype=Homepage
The Democrats seem to be making race their platform too. Trump hasn't said anything like Reagan in 1971 call to Nixon. With all the tweets that would have come out by now. Not saying Trump is Little boy blue. As for the economy, Bush managed to preside over the best of both worlds, a lousy economy -and- exploding deficits: The huge contrast between the well-being under Bill Clinton vs. Bush tells me that, unlike Mr. Krugman contends, who is in the White House matters on the economy.
1
@Mark Browning
"Bush managed to preside over ...a lousy economy and exploding deficits"
Our economy hit an inflection point in 2000, the burden of personal income taxes hit an all-time record.
Talk to President Al Gore who stood for election 6 months after taxpayers received those bills for an extra $230 billion that taxes were going up.
William Allen White’s famed editorial question of “What’s the Matter With Kansas?” is applicable to all political machinations and transcends time. Why is it so easy to convince people to choose or vote against their own best interests?
Perhaps it’s magnified in our era of voluminous instantaneous communications and the increasing need to distill complex problems into tweets and bumper stickers.
But in any case, the willingness to swallow illogical explanations and solutions because they’re easier to digest appears to be built into the human psychological makeup.
Woe is us.
2
@John Vance
"Vote against our own best interests:"
Maybe not.
1 Economic growth in 2018 $630 billion vs $488 billion in 2016 vs Europe’s 210 billion
2 Full-time jobs up 3.1 million in 2018, 200% of the 1.56 million increase in 2016.
3 Manufacturing jobs up 500,000 under Trump. 2016? Down 7,000.
4 Total job openings 7.3 million up 25% from 2016’s peak 5.8 million jobs
5 Unemployed 6.0 million in 2018 versus 7.5 million in 2016
6 Stock market: $33 trillion, up $9 trillion since the 2016 election
7 Mortgage delinquency rate down 26% from 2016
8 Combined Black and Hispanic jobs set ten all-time records in 2018 at higher wages than in 2016
9 Consumer confidence highest in 20 years, up sharply from 2015 and 2016.
10 Unemployment 3.7% lowest since 1969.
11 IPOs up 250% from 2016 to $46.8 billion in 2018
12 Real disposable personal income up $597 billion in 2018 versus $244 billion in 2016
13 Total wealth $108 trillion up $13 trillion since the 2016 election.
14 Business investment growth up $334 billion in 2018 versus $52 in 2016
15 Total federal revenues increased 3% from 2016 to 2018 after negative 1% in 2016
17 Wage & salaries up $390 billion in 2018. 2016? $255
18 1.6% inflation in 2018
19 5.7 million escaped welfare since December 2016
20 Murder down 6.3% since 2016
21 Federal debt service is 1.6%, less than half of peak
22 Households able to pay all bills 82% in 2018 up from 75.9% in 2016
Maybe we know our interests better than you know them.
Paul, you wrote, "Imagine how much better shape we’d be in if the hundreds of billions squandered on tax cuts for corporations had been used to rebuild our crumbling infrastructure. Imagine what we could have done with policies promoting jobs of the future in things like renewable energy, instead of trade wars that vainly attempt to recreate the manufacturing economy of the past."
I can imagine it but to what end? Hot air and blather.
Vote 2020.
1
Professor Krugman -- The rationales provided by Chairman Powell and Wall Street economists about buying insurance for some possible future global economic decline sound like academic support for a misbegotten policy. Instead, they should told the emperor he has no clothes.
Nothing Donald Trump does serves anyone other than himself -- unless accidently so. I argue that he told the Chairman to lower the Fed's rate because he has hundreds of millions of dollars of debt outstanding against a long list of failing properties, and such a cut saves him a non-trivial amount of money.
1
GOP tax cuts are a scam.
They slice a bit off for a few middle-income folks, but deliver the real benefits to their corporate and financial masters of the universe. Ever since Reagan began the game, each round has only worsened income and wealth inequality. Those that produce the economic benefits see them shrink with every gash of the tax cut knife.
Scam, scam, scam!
2
@David Potenziani
"Scam, scam,..."
Maybe, maybe not.
Trump cut taxes by 100% to zero for all families of four making $53,000 or less.
Still, personal income tax revenue came in higher in 2018 than in 2016 when high tax rates were in effect.
With middle class and poor families paying nothing, that means that the rich have to be paying more, a lot more.
The deficit was only $8 billion last month. Now we see the effect of compound interest over the next 12 months.
Technically, the Trump cuts worked exactly as intended: they enriched the wealthy and corporations and they put additional budgetary pressure on social services programs.
Anyone who thought they would do anything else is a sucker.
4
@Jack McCullough
"They put additional budgetary pressure on social service programs."
Nope.
Food stamp enrollment is down over 6 million.
Social Security disability is down by over a million. First time people have left to get jobs to a significant degree.
Social Service budgets are higher than ever and they have less work to do.
Sadly there are many who believe Trump’s lies about new and previously closed factories opening
2
@MEH
Manufacturing employment is up by over 500,000 under Trump after being down by 7,000 in 2016.
They have to be working somewhere don't you think?
It's either new or old factories.
1
Trumponomics is a flop, but will the voters recognize that it's a flop? Can Trump sell Trumponomics as a success but for the Chinese and the Democrats?
1
Dr. Krugman, I don’t anyone who isn’t doing well , are you saying your not doing well Paul,
2
Umm, because Trump does not know a thing when it comes to running the government?
“Let me tell you. I will run the government the way I run my business.”
— Donald J. Trump, who lost 1.2 billion in 10 years, bankrupted casinos (casinos!), and stiffed contractors
2
Do they really have faith in magic of tax cuts or are they just bald-faced liars, spewing nonsense to their base in order to benefit the rich?
1
@Andrew Kelm
U.S. gdp growth in 2018? $680 billion real
European Union in 2018? $210 billion
Full time job growth in 2018? 3.10 million
Full time job growth in 2016? 1.56 million
"Why was trumponomics a flop?" Why would we expect anything better from a "stable genius" who been bankrupted so many times?
1
Perhaps with just a few more tax cuts, he can settle his IRS bill and get a refund.
4
How sad that race baiting the electorate to find a scape goat in brown people who enter illegally is so attractive to Trump's base and beyond. Can Trump really pull off a win in 2020 based just on promoting hatred of illegal immigrants? Is this what motivates an entire segment of the electorate?
I like to go back to an article on Truthout.com called "This is Your Brain on Poverty." The author writes, "But let’s think a little larger for moment. There are 49.7 million Americans currently living below the poverty line. Going back to the sugar cane study, we can expect each of them to gain 13 IQ points if the gap between their needs and their means to meet them were somehow bridged. If each of them were to have their situation somehow ameliorated – say, by giving them $4,000 per year – we would collectively gain 646,100,000 IQ points. That’s the equivalent of 4,038,125 Einsteins."
@David
Maybe, maybe not
In 1980, the top 1%, those making more than AGI $80,000, paid $47 billion in personal income taxes, 19% of all personal income taxes.
Adjusted for inflation, $80,000 is now $237,000.
In 2018, taxpayers with an AGI of $237,000 or more paid over $900 billion in personal income taxes, more than 55% of all personal income taxes.
As a result, the typical family on poverty has a car, cell phone, flat screen tv, running water, electricity, toilet, shower, sink, bed, stove, refrigerator, air conditioning, silverware, shoes and more calories than are healthy for them.
By comparison a little girl from a poor family in India cleans latrines with her bare hands to help support her family, lives in a shack without electricity or running water, has no shoes and eats rats to survive.
By world standards, our poor are already rich.
I volunteered at a school for the homeless for a year. We were throwing away over five pounds of unopened food canisters every day. Things like applesauce that I would have devoured as a youngster growing up in poverty.
2
The headline really should read, "Why IS Trumponomics a Flop?"
It's not as if we are done with all this.
1
Trump is crazy and the Republicans are lying.
3
Math
1
Paul seems to think Americans believe in truth and facts. Pfft. That is why the Left always loses - too much logic when the foils are deeply ignorant and hateful people.
Americans love to believe lies. Pay attention.
2
Maybe if you pray hard enough jesus will give you a recession in time for the election.
2
“Why Was Trumponomics a Flop?” Simple answer. Trump and his circus style government along with his yo-yo temperament.
2
Increased cash flow for monopolies and oligarchs does nothing more than pump up the valuation of stocks to unsustainable levels.
Take the same money in taxes and spend it and we stimulate the economy and bolster jobs and wages.
Better yet, fine corporations whose earnings to wage ratios rise above historic levels and you will see these excess profits diverted directly into increased payrolls with all of the benefits without having to tax and redistribute according the fickle politics of Washington.
It’s long past time that excess profits from price gouging be diverted to bolster sagging worker purchasing power.
3
@Robert Goldschmidt
7.1 million jobs are open
6 million are unemployed
3.1 million full-time jobs created in 2018 up 100% from the 1.56 million created in 2016
Trumponomics. Mr. Krugman, you coined a word and you lost me. You should have chosen Republicanonomics.
1
"As I wrote three days after the 2016 election — after the shock had worn off — “It’s at least possible that bigger budget deficits will, if anything, strengthen the economy briefly.”
And here's what Pof. Krugman said the day after the election, something he conveniently omits from this column:
The economic fallout of a Donald Trump presidency will probably be severe and widespread enough to plunge the world into recession", New York Times columnist Paul Krugman warned in a New York Times opinion piece published early Wednesday. Here's the link: https://www.politico.com/story/2016/11/krugman-trump-global-recession-2016-231055
2
Nobel Prize-winning economist Paul Krugman predicts a "global recession with no end in sight" if Donald Trump is elected president........
Allister savage, Ottawa, Canada
2
Democrats were lucky last time around when Great Recession happened in 2008 instead of 2009. Otherwise Obama, if he won anyway, would had been blamed for the recession and was a one term president.
Trump may be lucky this time with recession coming in 2021. He may win, particularly if Democrats go all the way with Medicare for all (so easy to demagogue!). However, if Democrat wins, she/he will be surely blamed for causing markets to tank in anticipation of social policies.
My understanding is that Trump crimes resulting in indictments and a recession are needed for some kind of resolution and the nation’s divisions to start healing. Otherwise, we will continue to limp to catastrophe.
1
@CarolinaJoe
Study rational expectations theory to understand economics
The traders on Wall Street make their billions by more accurately predicting the economic future a nanosecond before their competitors.
In 2008, Wall Street traders predicted that Obama would:
1) become president;
2) enact a huge tax increase on small business by forcing the Bush2 tax cuts to expire;
3) socialize medicine, increasing its cost by $1 trillion;
4) increase federal regulation to over 190,000 pages.
Easy predictions to make, Obama was promising to do these things starting in 2007 when he declared for president.
When Obama’s probability of becoming president went to 50% (Iowa Political Markets), the stock market crashed $2.5 trillion. As it went to 100%, traders crashed the market by $8.2 trillion.
Those predictions? All correct.
Obama's policies resulted in only 13% growth. The lowest growth of any two term president in U.S. history.
There will always be shocks like the housing market - a $6.2 trillion shock. In 1987, Black Monday hit Reagan with a 22% hit to the stock market, the modern day equivalent of a $7 trillion shock.
Impact on Reagan's economy? GDP growth in 1987? 4.2% GDP growth in 1988? 3.6% Reagan's economy took the shock in stride.
Obama's economy? GDP growth in 2009? -2% First president not to have a 3% growth year since Hoover.
@John Huppenthal
Pretty skewed analysis.
The growth in 2009 has been totally decided in 2008, with Bush’s last budget deficit reaching 1.4 trillion.
Obama stabilized the economy and would likely accelerated the growth in 2010/2011 much more if his infrastructure bill had passed in early 2010. Should have eliminated filibuster to allow it to pass. He played it way too nice.
Yes Reagan was lucky too, the contraction of military spending since Vietnam war stopped during the first Reagan term and Volcker (appointed by Carter) stabilized the inflation.
Why is Paul Krugman so obsessed with CORPORATE tax policy? corporate taxes in the grand scheme of things are DWARFED by other sources of receipts, namely payroll tax and personal income tax. For example, last year payroll tax was 1.2TT, individual income tax was 1.7TT. Corporate taxes were only 205BB. Ok maybe they were lower because of corporate tax breaks. fine. in 2016, before the TCJA was enacted, corporate taxes were 473BB, compared to 1.11TT in payroll and 1.65TT in individual income taxes. Krugman's always seems to obsess over corporate tax cuts and never talks about how regressive payroll taxes are, or that middle america DID receive a tax cut last year (not just the mega rich). And NO I don't endorse trickle down theory by the way. Wage decisions are labor market driven, not a result of tax policy (reference dynamic scoring). I want to know what Paul Krugman thinks about the face that individual income taxes are a much bigger piece of the pie and that middle america DID receive tax cuts in 2018... yes they were in the form of less withholding on their paychecks but its there...
His own paper reported that.
https://www.nytimes.com/2019/04/14/business/economy/income-tax-cut.html
2
@Patrick Ryan
All families of four making $53,000 or less received a 100% tax cut.
Still, personal income tax revenues were higher in 2018 than in high tax 2016 despite a 14% tax cut.
That means the rich are paying more, a lot more in taxes.
@John Huppenthal
Those families got about $600-$700 tax cut a year. Is that really 100%?
Rich are paying more because that’s where all the money is. How poor can pay more if they don’t make enough to pay taxes? Faulty logic.
Well, so much for supply economics and the Laffer curve, again.
1
The Republican party today is not "conservative," not and/or "libertarian," and not and/or "liberal" Those labels mean little. It does not help understand the G.O.P to suggest that it's, for example, fiscally "conservative" while socially "liberal." Or it's "libertarian" because it believes in small government (it does not, given, for example, the size of our military and security complex).
The G.O.P. has a much more coherent and focused motivation. The G.O.P now exists only to provide more wealth and more control to capitalists.
Thus, lowering taxes on the rich while eliminating rules on certain businesses, but allocating governmental resources to certain businesses (e.g. military-industrial complex, resource rights to federal lands) are really all Mitch McConnell and Trump are about. If you do not belong to that relatively small group of beneficiaries, you do not count.
Of course what Trump/Mitch stand for is corrupt, but it is very simple. And they will use/abuse all branches of the federal government (and "states' rights"), and manipulate many naïve and foolish folks (e.g. the Federalist Society, alienated white folks, bigots, etc. . . . ) to give more wealth and control to the already wealthy and powerful.
4
It isn't hard to understand why the tax cut didn't work, it is basic economics that Trump nation especially doesn't understand. Tax cuts are a form of stimulus, there is no doubt, like government spending it drives people to do things with the extra money. The problem is that GOP tax cuts are based on the wrong notion to the wrong people, that if you give huge tax giveaways to the well off and corporations, that they will take that money and invest it in capital formation that in turn creates jobs..and therein lies the problem. The rich have too few people to stimulate much demand, is the first problem, give a buck to a middle class person, it generates 5, give it to the top .5%, it generates 1.25.
More importantly, investment these days is not about capital formation, it is about boosting stock price. Corporations get a tax cut? Buy back shares (benefits mostly the top .5%) and increase dividends...which makes all those ivy league stock analysts smile and nod.
Invest in new production? Invest in new jobs? Hire more people? Retrain existing ones? Those are costs, and you can see the frowns of the Ivy league stock analysts across the Atlantic ocean, and they frown, stock price goes down, CEO and executives don't make as much money......not to mention that the rich see any taxes as 'theft'.
Tax cuts only work if they are targeted, spending on new equipment, training, etc that creates jobs should get them tax breaks, not for buying back stock and giving dividends.
5
@music observer
In 2016, net business investment increased by $456
In 2018, net business investment increased by $618 billion
A $162 billion increase, over 30%.
While the Democrats were taking over the House, the stock market tanked by $5 trillion in terror over AOC's 90% "marginal" tax rate.
So, the market and economy had to come to terms with that meant. Stock market is back at peak.
We could grow 5% next year.
I cannot even ready Krugman anymore. Remember, this is the man who, when the markets sank the day after Trump's election, declared that they would NEVER recover. He was not talking about our country, our wellbeing, our sanity or our values. He was talking specifically about markets and he's an economist and he was wrong. Way wrong. Wildly wrong. The markets recovered and have been on a steady path up since then. I know the opinion pages are no place for humility but a least a little...
4
@SJG. Gee make one mistake and then everything you say is worthless? He who is without sin....
And don't forget the other boogieman that (supposedly) holds back the economy from its otherwise (supposedly) natural boom state...regulations! As the Trump administration systematically destroys the regulatory power of one agency after another we can expect this to also contribute to the huge non-existent boom brought on by tax cuts. And it was not China who forced us to ship all of our manufacturing over there; we did that totally ourselves. Here, China, take all of our jobs, we give them to you freely. Yep, that is not China's fault. How about some tariffs on the American corporate entities and fat cats that moved the jobs over there, er' I guess that would be taxes, right? But we cut that.
2
As usual, Krugman presents a one sided analysis and ignores facts and relevant statistics that - taken as a whole - throw cold water on his assertion that tax cuts or tariffs are not working.
Tariffs are a tool used to alter the behavior of trade partners, not an integral part of the financial system.
And the tax cuts have had positive impact far beyond the few ultra-wealthy that Krugman both despises, and envies.
In short, this is just pablum for the already-converted progressive left.
3
@Objectivist. What have been the benefits other than a rising stock market which is not something that has an overall benefit to all parts of the economy? Your fuller analysis please
@Objectivist
One quarter at 3.1% growth, that’s all the benefit. Stock market become overpriced and next recession will evaporate all the money invested and all the stock buybacks. More than 23 trillion debt, 1.2 trillion budget deficit and in 2021 we are at square one again, without any noticeable investment in infrastructure, education and R&D. Chaos in health care again.
1
@CarolinaJoe
"Stock market ...overpriced..."
I assume you are buying puts and will make millions.
Tell us how that goes for you.
Wait. You don't actually think Republicans actually believe that tax cuts stimulate the economy and are ultimately beneficial to the lower 99%, do you?
5
@Diego
In 2018, the combined employment of Blacks and Hispanics set ten all-time records driving unemployment rates to the lowest levels ever recorded and the highest degree of equality ever recorded.
In 2018, the bottom quartile received the largest pay increase of any quartile and wages overall increased by more than any year since 2007.
Real disposable personal income increased by $597 billion, by far the largest increase in history.
All families of four making $53,000 or less had their personal income taxes reduced to zero.
Every time I read a Krugman piece on the economy, I keep waiting for the part that talks about trillion dollar annual deficits. At our current pace, what is the projected timeline for when the entire annual budget consists of entitlements, military spending and paying the interest on the national debt? Surely it is just around the corner.
Yeah, it’s all the fault of those shiftless poors and olds, as opposed to the shiftless, sociopathic rich and greedy.
Many make the assumption that Trump supporters are carefully following the economy and are noticing that the tax cuts and trade war haven’t delivered. But in Bizarro World, they have delivered. Their man is a hero, a demigod, a warrior. There is no amount of objective data that will convince them that the middling Obama economy continues apace and that they’re no better off under Trump. Why? Because Trump told them they’re better off.
5
Changing the corporate tax rate only means that companies get to keep more to their shareholders and less for the government. It is the same pie just cuts differently. Shareholders get to keep more of corporate profit and the company's stock prices go up, but did people sell stocks and spend the money? No.
Corporations make more money and invest more because customers want to buy more from them, and it has nothing to do with how much tax companies pay. It is just a simple fact.
But if tax cuts were for individuals, then as they see more money to take home, they may want to buy more goods. but that was NOT the tax cuts Republicans did three years ago.
So why Republicans cut corporate tax cuts? Because the Republicans get more corporate and billionaire donors to fund their campaigns, and they need to pay them back.
Simple and straight forward, it isn't it? "Cutting corporate tax to spur investments" is just a lie to sell the tax cuts....
While any trend change with the Fed is worth noting, in absolute terms, if you look at a five year rate plot, rising over many quarters, falling over many quarters this week's cut by itself is pretty teensy, sort of like a fly on a basketball.
Fixing a bad trade situation is something the Democrats should have been championing. Who cares where the jobs are going? They're leaving China, which is the important thing. 2 systems are competing for dominance for the next 100 years. China's centrally planned atheist state, or western Liberalism. We were on the course to lose that battle under Krugman's ideas. A change was necessary.
2
Growing up in Europe, I had never heard moaning about taxes like I heard for the first time when I moved to the US. I've been here now for more than 20 years, and I am still stunned when I hear people going on and on about how terrible it is having to pay taxes.
Civilization has a cost, and we use taxes to meet that cost. If you don't want civilization, or government as a central means of efficiently running civilization, or taxes to pay for any of it, for heaven's sake go and live in Somalia. (And while we are at it, I've never heard moaning about government, along with the tired old tropes about government inefficiency, like I hear in the US. No government is perfect, but it's a non-profit organization that is the best thing we have in terms of efficiently serving people's needs. Yet Americans have fallen for the nonsense, promoted by corporate interests, that government is the problem, not the solution. My goodness.)
No politician who claims he/she will lower taxes will ever get my vote. Please, increase taxes on all middle and upper class people. (Lower them on the poor.) Put the money toward creating a prosperous society for all--and then watch the economy boom.
Lowering taxes never has done, and never will do, anything in the long run other than destroy the economy for us all.
Savvy, America? What will it take for you to learn?
11
@EB You have to realize that our Country’s very existence is because of taxation. Taxation without Representation was THE spark that litbthe fire of America’s independence from Great Britain. Taxes will always be a hot topic for Americans.
1
It is naive, or at least simplistic, to assume that Trump’s economic policies are the product of a poorly conceived conservative agenda.
Dating back to his obsession with President Obama’s birth certificate, Trump has relentlessly pursued an assault on America’s democratic institutions and reputation. Since becoming President, he has worked to undermine relationships with our closest allies, while lauding the achievements and policies of dictators and oligarchs. He has withdrawn from hard-won treaties and agreements on everything from climate change to Iran’s nuclear program to international trade. He has denigrated and demeaned America’s Intelligence Community and Federal law enforcement agencies. He has demonized NATO, an alliance that has helped maintain world order for over 70 year.
Just this week, Trump threatened to start a Cold War style arms race by withdrawing from the Intermediate Nuclear Weapons treaty, rather than working to better enforce Russian compliance and to bring China into the agreement.
Finally, as you note, his tax cuts will add trillions of dollars to our already unsustainable national debt and his tariffs are more likely to weaken the American economy than to strengthen it.
It appears to me that a much stronger case can be made that Trump is actively working to destroy America than that he is simply pursuing some ill-conceived economic agenda. Whether he is acting out of ignorance, malice or self-serving corruption, the effect is the same.
3
The line about the "policy zombie" nature of the "magic of tax cuts... eating G.O.P. brains" made me laugh out loud. But I think the fact that Republicans cling to this concept has, unfortunately, nothing to do with what they believe about economics... it has everything do do with what they believe about marketing. It's a winning marketing strategy, and like many of those, it doesn't have to be true to work.
4
Krugman is incisive as usual. However, my worry is that Trump may not need the economy to win; racism alone might well be enough. Already there are people who have been hurt by his economic actions but nonetheless continue to support him. It's mind-boggling and beyond frightening in so many ways, but it's happening.
2
The last two Republican administrations, with their tax cuts for the wealthy & big business, ended in a recession !
The great Depression happened under a Conservative Republican president, Herbert Hoover !
The Trump-Republican tax cuts are projected to result in a deficit of over one trillion dollars !
Trump's tariff war has caused economic chaos around the world!
Brexit, with Great Britain's new Trump like prime minister, is projected to lead the country into a recession, which will effect the entire globe !
1
Mr. Krugman's assertion that "Pundits who think that Trump will be able to win by touting a strong economy are almost surely wrong [because] he definitely hasn’t made the economy great again" is painfully naive. Whether or not he's *actually* "made the economy great again" doesn't matter, because he's going to keep telling his supporters that he has until he's blue in the face either way. He lies fervently, enthusiastically, and with all the conviction of someone telling the truth.
It's exactly what he did during 2016, and he had a much harder job of it then, because he had to convince his supporters that a strong, steady recovery was actually "American carnage." This is the easy part - all he has to do is sit back, stop lying, and let the (fundamentally same as Obama's) economy stand on its own, and given the groundwork laid by his previous lie, suddenly he's a hero and a miracle worker.
When Mr. Krugman tries to barb Trump by claiming that he hasn't "made the economy great again," he's already lost, because he's already let pass unchallenged the premise of that groundwork lie - that the economy Trump inherited wasn't already "great."
1
"Republican faith in the magic of tax cuts — and, correspondingly, belief that tax increases will doom the economy —"
I don't think Republicans actually believe this, any more than Trump really believes that he's got a very good "abrain" and knows more than anyone else about renewable energy or drone technology. It's a lie they tell so they can repay their campaign donors and our system lets them get away with it. In an evidence-based world, the claim would be laughed out of the discussion, but that's not the world we live in.
https://www.axios.com/everything-trump-says-he-knows-more-about-than-anybody-b278b592-cff0-47dc-a75f-5767f42bcf1e.html
Dr. Krugman lays out a great and understandable analysis of the failures of Trump/Republican economic moves.
Yet, I repeatedly read comments from the "pro Trumpers" about how Trump "did everything he promised," how his policies have created the greatest, most prosperous economy for US citizens, tax cuts have spurred the economy, how everything is unicorns and roses since January 2017.
I can't name anything Trump has done to support those contentions. For instance, where is the data to support the claim that "thousands" of companies moving back to restart manufacturing in the US?" It's just not there. Yet people make these absurd claims and base their voting on these misguided notions. This cannot lead to anything good for the US.
3
The Republicans operate under the profound delusion that the "multiplier effect" of an employed person's spending depends on whether they are employed in the public or private sector. The Republicans claim it is much less if the person works in the public sector. In reality, it is the same at any salary level in both sectors.
3
Who could guess? The Rump had all the right credentials: Born to wealth; squandered that wealth; borrowed more wealth; squandered that wealth; declared bankruptcy 6 times; opened & closed how many "businesses?"; married 3 women; cheated on every woman; sexually assaulted how many other women; possible a girl? I don't know. Follow the money. Follow the amorality. Good on paper. Can't figure out what went wrong.
7
Three points in response:
1) Given China's conduct, simply shifting jobs from China to Vietnam is in itself a beneficial outcome;
2) Stemming from that, there will be times when maximum economic benefit must be tempered by, for example, security issues;
3) The "facts" of the economy hardly matter at all in comparison to how people feel about what the candidate says about the economy, not because people are evil or stupid but because that's just how a *lot* of people are.
4
Gold rings and purple stripes for senators; bread and circuses for the base. Kept Rome afloat for three centuries.
1
@Paul
Whew. At least we know things'll be this good through the President's 75th term
Perhaps Republicans are the type of people who believe that a bird in the hand is worth two in the bush.
In other words, give me my money now to spend how I want. One, I don't trust you or your plan, and, two, it's a freedom thing.
As Keynes said, in the long run, we are all dead. Maybe he was a closet Republican.
In short, it takes all types of people to make a world, the good, the bad, the greedy, the generous, the creators, and the critics. Maybe the Earth's motto should be, love it or leave it.
The Democrats need to push the idea that Trump has as much to do with this economy as he does with the sunrise. President Obama saved the economy after the GOP and their corporate masters tried to kill it in 2008 and then Obama watched it prosper and left it alone. Make the point known that Trump inherited the economy just like he inherited his money and will bankrupt our grand children as surely as he bankrupted a casino. A casino for crying out loud.
5
On one hand Trump tells us the economy is great.
On the other hand, he wants to cut the Fed Rate to stimulate the economy.
And I would bet when the sugar high of the recent tax cuts wears off and Wall St. sees the increasing deficits and debt, a recession will come.
When that happens, the Fed will have very little stimulus available to them.
Interest rates will already be low. And no money for stimulus spending on infrastructure.
6
@Independent
You do realize any President has absolutely nothing to do with what the Fed does? They can like it, love it or hate it, but that's all. As though stimulating the economy is a bad idea, you'd prefer hand-wringing, nay-saying and doom. Please don't run for President.
We have a very good economy that picked up steam shortly after Trump took office and then further steam following his tax cuts. Krugman admits this. And it is booming in spite of tariffs which even Trump's economists agree are TEMPORARILY harmful depressing to the economy but which (they contend) are aimed at better long term trading terms with China.
So where, exactly, is the evidence that either the tax cuts or the tariffs (but certainly the tax cuts) have been a failure? Because the only evidence cited in this article (at least for the tax cuts) lead to the opposite conclusion.
6
@Econ101
Why do you leave out the huge increase in deficits? Back to a trillion dollars in only two years. The tax cut, coupled with increases in Keynesian type spending have caused a small bump. The cost will be long term damage.
Trump's trade wars will disrupt supply chains and also make countries turn protectionist against the US. Exactly what has happened in the past. The GOP has really done a 180 on free trade since it was Reaganomics that promoted moving manufacturing overseas. And those tax cuts did not move manufacturing back to the US.
6
@Econ101
Jobs in 2018 = 2.6 Million
That was with "tax cuts for the job creators"
Jobs in 2015 = 2.7 Million
Jobs in 2014 = 3.0 Million.
That was without "tax cuts for the job creators" and with the "jobs killing" Obama-care.
And that was after getting us through the worst recession since the Great Depression.
In addition, Obama cut the deficit by 2/3.
The 2017 Ryan / McConnell / Trump tax bill is increasing the deficit from $600 Billion to $1 Trillion. Which is to say, Trump is increasing the deficit by 2/3.
I wouldn't mind if Trump voters got fleeced but the rest of the country is getting fleeced, too.
10
@Econ101
After adding $2-trillion+ to our nation's debt, we've continued on the same trajectory that started 8 years ago under Obama.
If that's all $2-trillion bought us, then yes, the policies that created all this debt were indeed a spectacular failure.
2
I wonder how many conservatives around actually believed that US companies would spend money on transferring manufacturing lines to the US due to tax cuts. The oligarchy knew it would be used for stock buybacks, but they certainly never let that hit the front page. Warnings from people like Krugman were ignored of course...can't admit he was correct...
8
@glennmr
Speaking as a conservative, I certainly didn't, nor is that the point. The manufacturing jobs of 50 years ago are gone forever. Economic growth requires continual increases in productivity. Greater productivity leads to economic growth and higher wages.
I don't expect or want all the US manufacturing jobs to return. I want US companies to continue to create efficiencies through automation and outsourcing of manual labor to low cost countries WHILE creating new, better paying jobs for US workers. Which is exactly what is happening today.
As for stock buybacks, they're no different than dividends. They return profits to the owners/shareholders -- most of whom are ordinary retirement investors, not the super-rich. All good companies must find the right balance between investing profits back into the business and providing dividends to the owners.
We have a good economy today, corporate profits are healthy, unemployment is historically low, and wages for the lowest income workers are growing faster than those for the highest income workers.
1
@Econ101 Once again you left out the part where all these positives are a result of MASSIVE deficit spending that accomplished nothing other than extending prior growth a few more years.
As a real-life conservative, I think you've confused "conservative" with "Republican," which sadly is an extremely common mistake these days.
4
No, let’s REALLY Econ 101.
As in what Trump promised, and promised very loudly, was that that money’d go into new factories, upgrades and jobs.
It did not. And you were told it would not.
3
Saying that Republicans believe in tax cuts to improve the economy is assuming (incorrectly) that both Republicans and Democrats are making a good-faith effort towards this goal.
The reality is that Republicans know that tax cuts won't have this effect, but use it as a justification to benefit themselves, their supporters, and donors.
2
Republican economic policy suffers from cognitive dissonance: their underlying mantra for more than 40 years has been small government, and tax policy has been the vehicle to achieve it (think Grover Norquist). But because Americans still want the services and programs that government provides and because defense is also a Republican priority, government doesn’t shrink. Instead, we have the increasing dependence on debt to finance what we should be paying for in tax revenue.
I think of Trumponomics as the ultimate stress test for the US economy. The uncertainty that Trump has injected into the system has provided economists a real-world lab for assessing the strengths and weaknesses of our economy. It has convinced me that beginning with 2010, the economy has rebounded in a way that is more robust than it has often been given credit for. Of course, you don’t want to continually stress banks beyond the period necessary to determine where weaknesses lie. So too with the American economy: we’ve established its resilience, but we should stop the test now, or at least in November 2020.
3
Republicans/Conservatives do not have "faith in the magic of tax cuts" , they just use that to market them to their loyal, non-inquisitive base!
6
We can list a lot of reasons why Trumponomics didn't work.
But the most essential one is that his trade war with China and corporate tax cuts, albeit accelerating an already existing process of deindustrialization of China (about which the Chinese were already aware for decades and were already prepared), it didn't bring manufacturing back to American territory, but to a chain of Third World countries across SE Asia. Put it in other words, Trump dislocated the problem (to another part of the globe), not solved it.
It is immaterial if China gets deindustrialized: if this deindustrialization isn't accompanied by reindustrialization of the USA, say goodbye to its status as the sole superpower.
For a country -- any country -- to be the world's sole superpower, it needs two things: be the industrial superpower and be the financial superpower. It takes two superpowers (industrial and financial) to be the sole superpower. And the USA had both in 1946, the aftermath of WWII.
Now, the USA is only the financial superpower. It lost its industrial superpower status somewhere between the mid-1970s and mid-1980s. That's why Trump's corporate tax cuts went directly to Wall Street (buybacks and dividends), not to reindustrialization.
3
In order for tariffs to bring jobs back to the US, they must be applied to the products of all low wage countries, not just one, China. Otherwise production is just shifted to non affected low wage countries.
1
Wait, "Trumponomics"? There's a word for it? I thought of it as more of a bunch of rumpled Post-It notes, jumbled together with some golf score cards and hamberder wrappers, in an old box that formerly held unsold copies of Trump the Game.
5
Trump's tariffs are not really the best answer to the US' trade problems, but without an overhaul of the entire world trade system, it is the best he can manage. I honestly believe that the best solution is what I tried to lay out earlier, the democratization of international finance.
But in addition, I think we need to set limits on outsourcing such that it is proportional to sales in each country. It makes no sense for poor countries to be producing iPhones for rich Americans. It's fine for the Chinese to produce them for their markets.
We need some new rules. Economic success was supposed to make our lives better, and it seems to be doing the opposite for everyone but the rich.
1
Should general revenue be used to rebuild infrastructure?
Build roads with general revenues to encourage car and truck traffic which is a major
contributor to global warming.
Far better to raise gas and diesel taxes and use those revenues to build roads, and encourage less global warming bringing of hydrocarbons at the same time, rather than use general tax revenues.
2
The question isn't whether Trump's policies are bad for the economy (or surely bad for those who aren't wealthy), the question is how do you get that message across to the voters.
Although I find Professor Krugman's article easy to understand, it is not a source of information to the masses.
The Democrat challenge is how to reach the masses - especially when the opposite doesn't view the truth as a matter of importance.
2
The tax cuts were more to insulae the economy from the effects of the trade war.
And, if you don't think the trade war is having effect, just compare the Chinese stock market with the US stock market.
2
@Amy
I guess I don’t see how tax cuts insulate the country against tariffs. This is one of the primary reasons Trump got into office, peoples willingness to follow logic, like the assertion that a 1.2 trillion dollar tax cut is to offset tariffs, I’m sorry but that’s not how it works. It’s clear that what you know about tax cuts for the rich and corporations wouldn’t fill a thimble.
4
It is shocking to think that our infrastructure has gone begging, when it could have been paid for with the tax cuts. The tax cuts were a long-dreamed-of plan of Paul Ryan who floated them during the Romney Presidential run, but was criticized for not explaining how they were to be paid for. Well, Ryan saw his opportunity when Trump got elected and wanted a "win". Now Ryan is gone and throwing his hands up about the deficit, as if it's not his doing.
7
Japan with roughly twice the debt to GDP ratio and low interest rates and lack of inflation is a good counterexample to the burden of debt hypothesis. The reason Japanese government debt fails to crowd out investment is the Central Bank buys the bulk of the debt. Interest on the debt then becomes income to the government. In fact if the U.S. failed to waste money on needless military spending but built infrastructure paid for education ... the economy would markedly improve. State investment as well as private investment markedly improves the economy.
1
@Michael Cohen
Is Japan a good model to follow? Hasn't its economy been stuck in neutral for about 3 decades now?
Wow, you have to be living in an alternate universe to call the current economy a flop. This from the same guy who foretold the most catastrophic economic depression ever in the wake of a Trump Presidency, and has foretold a failure around every corner-- every week-- since his election. You'd think he'd know better by now, but the man who prognosticated that the internet would have no greater impact on the economy than the fax machine hasn't learnt his lesson..
4
The evidence is actually pretty solid that the tax cuts and deregulatory efforts have under Trump have led to increased economic growth and that the accompanying increase in jobs has finally led to faster-than-inflation wage growth. (It's ironic that Krugman cites the high deficit spending for the economic growth while failing to note the tax cut's roll in that.)
The tariffs have certainly been downer, and to the extent Trump believes that tariffs are an end in and of themselves, that's an absolute loser. Of course, the fact that the economy has performed so well in spite of the trade wars is further credit to the success of the tax cuts. I have my doubts as to whether Trump actually wants a trade deal with China or prefers to have permanently high tariffs. If the former, if a trade deal gets done and the tariffs lifted, that will be a huge boon for the economy.
4
"Bill Clinton’s tax hike didn’t cause a depression, George W. Bush’s tax cuts didn’t deliver a boom...Sam Brownback’s Kansas tax-cut “experiment” was a failure."
From 1981 to 1986, Reagan reduced the top tax rate from 70% to the 1990's 39.6%. From 1981 to 2000, real median personal income increased by 39%. Didn't happen in high tax Europe.
In 1999 and 2000, the economy slammed into that 39.6% tax rate of Clinton's and we set an all-time record for the burden of personal income tax on the economy.
We have struggled since. Bush's temporary tax cut couldn't overcome the rational expectations that Obama's promise to force a huge tax increase which he did.
The deficit was only $8 billion last month. People are going to be stunned at how fast revenues go up and all the while, people are being pulled off of welfare rolls which is going to continue to reduce crime and government expenses.
The less than 2 percentile change in Kansas tax burden compares to Reagan's 42 percentile point change. It kept them perfectly average tax burden and growth.
Continuous bottom ten taxation states outgrew top ten taxation states by over 100% in job creation for the last 40 years
A vivid example is Texas versus New York. Not that long ago New York had more jobs than Texas. Now, Texas has 3 million more jobs than New York. Thirty states don't have 3 million jobs total
In 2018, we grew $680 billion real. High tax, larger Europe grew $210 billion.
Taxation has a big impact on growth.
In my opinion, this is what the economy and the people of this nation need: Leadership with a vision for today as well as for the next 50 years. Was hoping it would have started under Obama. It kinda did. The world isn't static and the vision shouldn't be either.
1-Education: K-12 and beyond. Free and low cost options for post K-12 education and training will power the economy for the remainder of this century. Renovation of K-12 schooling including facilities along with community based solutions, better pay, recruitment and retention of quality teachers. As a retired teacher I've seen too many leave; for good reason.
2-An entire redesign of our national infrastructure which includes our energy grid and energy production along with transportation and public buildings. Focus on renewables. #1 above goes hand in hand with this plank.
3-Healthcare for all at an easily affordable price. There's lots of existing models. Let's examine them all and come with a hybrid of the best that works for us.
4-A complete overhaul of taxation and banking which provides more transparency and places the burden of taxation where it belongs--on those who profit the most. A larger and fairer share of the pie for those who create the goods and services which create our amazing abundance.
5-Term limits and campaign finance reform. 3 term limit for Senate. 16-20 year limit on SC justices. End Citizens United.
6-Election reform: Secure elections, end of gerrymandering, remove electoral college.
3
Yes, things are awful. Record low unemployment, continuous job and wage growth. I used to look forward to reading Krugman's columns, but now I see that this emperor has no clothes.
5
The stimulus of high oil prices on U.S. business investment in the oil & gas sectors has been mentioned by Prof. Krugman in other columns. It would be interesting to have a closer look at the impact of low oil prices leading up to the 2016 election and the impact of rising oil prices since.
2
One other myth floated was that corporate tax breaks would lead to higher wages. That only happened on a very modest scale. As you observe, the lion's share went to stock buybacks that increased shareholder value. It benefitted smaller shareholders, true; but the overwhelming benefit went to those who hold many thousands of shares. Until they sell those stocks, they won't pay a nickel in taxes on those gains. And when they do, they'll pay at more favorable tax rates than those paid by wage earners. Well played, GOP!
4
Anybody else wonder what these buy and sell ploys show about the president’s personal finances? Is he moving prices of his holdings through temperamental displays to allow him to buy or sell at will? Sounds silly, but then look who this is. Mr. Deal Maker. Moving the market?
It might be a flop for us, but is it for him? Personally?
4
Joan I have been thinking the same thing since he became president. He is the first president in my lifetime that can tweet and move the market. His buddies are all making millions every week buying and selling futures. I wonder if the SEC has even try to follow the money. No they were too busy putting Martha Stewart in jail . @Joan In California
3
I have long been a believer in PK. He is rarely wrong in his predictions and analyses. One of the most consistant of economic disasters — recessions — has been the hallmark, the underpinnings of what George H.W. Bush called "voodoo economics," also known as, trickle-down economics. This voodoo doll theory, sewn together out of thin-air thinking by libertarian economist, Arthur Laffer, has failed with every try.
It is an invitation to greed by those with the most to gain. To bookend this problem, The Great Recession was a result of trickle-down on its grandest scale following two decades of reckless deregulation by Reagan's choice as Fed Chairman, Alan Greenspan, another libertarian economist.
The first bookend came with a warning from Reagan's first budget director, David Stockman. He and his budget team warned RR that implementing trickle-down theories would cause another recession by the end of the '80s.
The point is, while Trump is a loose canon with no understanding of econ' 101, we must also understand Republicans' loyalty to this thrice-failed theory. During a "hot mic" moment, then-speaker Paul Ryan proclaimed the real reason for the giant tax cuts to corporations, and the wealthy. He was heard saying, he now had the tools to kill Medicare, Medicaid and Social Security, those successful social benefits conservatives deride as "entitlements."
The Republican Party has embraced that philosophy for more than 35 years. They won't stop unless voted out of office.
5
@David Ohman
When has supply side economics not worked?
Trump reduced tax rates in 2017, in 2018 we had real economic growth of $680 billion, up from $290 billion in 2016. Larger Europe only grew $210 billion.
Reagan reduced tax rates from 70% to 50% in 1983, the economy grew 7.3% in 1984. The highest growth in the last 65 years.
Reagan reduced tax rates from 50% to 28% in 1986, the economy grew 4.9% and 3.6% in 1987 and 1988.
Reagan tax cuts created the highest six year period of growth, 31% since the Kennedy tax cuts in the 1960s (37%).
Congress overrode Truman’s veto and cut taxes in 1948, we had six of the highest growth quarters in the history of the U.S. 16.4%, 12.7%,16.3%, 8%, 5.6%, and 7.1%
Calvin Coolidge and Warren Harding reduced income tax rates from 75% to 25%, economic growth in the 1920's was 37% as compared to Obama at 13%.
Kennedy reduced tax rates from 91% to 70%, economic growth was 6.5% and 6.6% in 1965 and 1966.
Clinton reduced capital gains taxes by 29%, economic growth in 1998 and 1999 was 4.5% and 4.7%.
Bush2 reduced tax rates in 2001 and had economic growth of 18% compared to Obama’s 13%
Nigeria reduced personal income tax rates to 24%, growing at 7% per year for over 10 years to the largest economy in Africa.
England eliminated the personal income tax in 1815, they averaged over 4% GDP growth over the next 35 years.
Vietnam? Just grew 6.5% and 9% after reducing their taxes below the U.S.
Poland, with lower tax rates, grew 5%
2
You are displaying a, charitably speaking, myopic view of how the economy works. There are many factors affecting growth beyond tax rates — the health of the global economy, population growth, the price of oil, public and private investment, etc.
Most of your examples of tax cuts spurring growth can be more plausibly attributed to these other factors. Yes, Reagan cut taxes. He also massively boosted government spending — and deficits. Pretty Keynesian of him. His economy also benefited from a huge drop in energy prices.
Professor Krugman writes about the sad state of affairs of the Trump presidency:
"On the other hand, think of the missed opportunities. Imagine how much better shape we’d be in if the hundreds of billions squandered on tax cuts for corporations had been used to rebuild our crumbling infrastructure. Imagine what we could have done with policies promoting jobs of the future in things like renewable energy, instead of trade wars that vainly attempt to recreate the manufacturing economy of the past."
This sad reflection on what could have been takes me back to three critical points in American history: with JFK's assassination our country lost out on an opportunity to enter an era of peace development (JFK and the Unspeakable: why he died and why it matters (2008), author James W. Douglas) ; and another point was the lost opportunity during the Bush senior presidency when John Sununu shut down the open discussion going on in Washington D.C. about the problem with global warming.
And of course, another point was the 9/11 event which denied any talk of a "peace dividend" with the emergence of "Islamic terrorism" as the new bogeyman to replace the evil Soviet Union.
Left-wing historians can certainly find more lost opportunities, but these are the ones that really get my goat because they are marked by very conscious intentions that have cost our nation countless thousands of lives and trillions of dollars and millions of species lost to oblivion.
5
@Chuck
"..what could have been..."
Total federal tax revenue growth by calendar after Obama forced a large tax increase in 2012:
2013 12%
2014 8%
2015 4%
2016 a negative 1%
Trump stopped a death spiral.
Monthly treasury statement is the data source.
https://fiscal.treasury.gov/reports-statements/mts/current.html
Last month, the deficit was only $8 billion.
1
Trump's economy is designed for wealthy people with shares to get even wealthier, by boosting share prices & reducing income tax, via corporations where required.
I also suspect that many people with inside information profit enormously by selling & buying before Trump unleashes one of his Twitter rants.
8
@Dean
Trump's economy is designed for wealth people. Perhaps, perhaps not.
In 1980, the top 1% (people with an AGI of $80,000) paid $47 billion in personal income taxes, 19% of the total.
Adjusted for inflation, that $80,000 is now $237,000.
In 2018, taxpayers with an AGI of $237,000 paid over $900 billion in personal income taxes, now more than 55% of the total.
As a result, the typical poor family in the U.S. has cars, cell phones, flat screen tvs, running water, toilets, sinks, beds, stoves, refrigerators and air conditioning, shoes, and silverware and has more calories than are healthy for them.
By comparison, the poor girl in India cleans latrines with her bare hands to help support her family, lives in a shack without running water or electricity and eats rats to survive.
In 2018, we set ten all-time records for the combined employment of Blacks and Hispanics driving their unemployment rates to the lowest ever recorded and to the greatest degree of equality ever recorded.
In 2018, the bottom quartile of wage earners received the largest percent increase of wages and wages overall improved by more than any year since 2007.
Since Trump started in office, over 6 million people have been rescued from food stamp dependency.
Our economy has never performed better for the poor, ever than it is performing right now.
And, it is going to perform better for them in the coming months, much better.
2
don't be silly. absolutely nobody talks about these subjects at places like Mar-a-Lago (where the membership fee is $200k) or other mock swanky golf clubs where the nouveau gauche go to show off how much smarter and better thay are than everyone else. they speak exclusively about golf, as everyone knows, and have no other agenda or interests, especially not money.
My favorite tactic by corporations was the old "Internal Loan" between a parent company and a subsidiary. The parent 'buys' services from the subsidiary, than claims the loan as a business loss. The subsidiary claims the loan as a capital gain and only pays 15% (at a maximum) for it.
1
Bread and circuses, but without the bread.
6
Republicans don't believe tax cuts help business growth, they like tax cuts because it helps the wealthy and starves government regulation. Self interest vs the common good, who will win?
8
@Tom Fitzgibbon
Maybe, maybe we want jobs for the:
1. 12 million discouraged workers degenerating into drug addicts and alcoholics:
2. 75 million dissatisfied workers wanting more productive jobs;
3. Seven million inmates being released from prison and jail;
4. Ten million college students drifting without any evidence of cognitive gains;
5. The one million high school students who spend their days looking out the window;
6. The 138 million illegal immigrants organizing their move to the U.S.
In 2018, an all-time record 3.5 million people quit their jobs and moved to new jobs. Jobs where they can better support their families and jobs that are more satisfying to them personally.
Life is good.
" On Wednesday, the Federal Reserve cut interest rates, even though the unemployment rate is low and overall economic growth remains decent, though not great. "
The unemployment rate includes part-time workers who often qualify for government aid programs. Also, it does not include "discouraged workers", who are not included in the unemployment statistics. In other words, official statistics are a misleading representation of the strength of the U.S. economy.
Federal Reserve rate cuts have the effect of propping up the stock market by insuring relatively good returns to stock market investors. The more odious aspect of Fed policy has been to facilitate the consolidation of U.S. commerce and industry. Low rates make it possible for large corporations to borrow at attractive rates for the purpose of reducing competitive pressure thru buy-outs and mergers. These are signs of weakness, not strength.
Consumer spending, including for homes and automobiles, is flaccid, and our trade imbalance is both negative and increasingly negative.
This is the economic reality that the "free-traders", and especially Mr Krugman, like to ignore.
1
"Instead, they basically used the tax savings to buy back their own stock."
I hope that I'm wrong, but this is frightening. When a company buys back stock, there is a short term rise in stock prices as there is more demand for the shares of stock. Longer term, it would seem that the prospects of a company would be hurt as there is less investment in plants, equipment, employee training and raises, research and development and - my favorite - IT systems. If you think of a business as being primarily an entity that invests for the purpose of yielding a better return , share buybacks fail. Essentially with the buybacks, management is saying "we have this extra money. We don't have any better use for it, so we'll give it back to shareholders." Its shrinking the company - an admission of entrepreneurial failure.
3
How come nobody ever mentions the trillions of tax dollars we spend annually on the military and "intelligence" communities. If I'm not mistaken, none of the branches of our military have ever been able to pass an audit. Billions of tax dollars are unaccounted for. I understand the policy of defending our neighborhood, but a rational reason for dumping billions into corrupt places like Iraq and Afghanistan elude me. The "conservatives" tear their hair out over fraud in Medicare and wasteful spending in other government programs, but do nothing to hold our military, and their suppliers, accountable.
8
The Trump corporate tax cuts were like the window of vulnerability to Reagan. Corporate shills decrying "overtaxed" companies that were losing competitiveness. The great truism of the election was corporate America was being pillaged for things like the ACA. As Krugman notes the failure of the tax cuts was that they don't really provide for corporate reinvestment. Just stock buy backs. The chicanery of the GOP politics to ram the tax cuts through without really looking into the details and the removal of middle class tax cuts were mere incidentals to their belief that tax cuts and deregulation would turn the US economy around. The country was already growing and money could have been better used by the citizens of the country whose interests were ignored.
4
Our infrastructure, especially our federal highways, are in awful condition. We need tax rates that help us pay for them. Another broken promise (to address the infrastructure) by Trump.
6
@Kathy Piercy It might to have some cooperation from Congress.
The number of people employed in the United States hit a record 157,288,000 in July, according to the employment report released today by the Bureau of Labor Statistics.
3
Wait...you mean there’re more people in the country now than there were ten years ago?
Well, I’ll be.
2
Thank Obama for that.
I just read that, in the past two years, there has been a 4% increase in coal mining jobs, so there's that. More people can anticipate suffering from black lung disease with less money to compensate them. And the air quality has declined.
I think Trump will run on the economy, and on painting Democrats as extremists who will take away everyone's jobs and medical care, if they let him get away with it.
1
How is the economy 'booming', or, even 'ok', when there are record homeless on every corner of every U.S. city?
I am 62 and have never seen as many indigent and homeless Americans in my lifetime.
9
Krugman feels that Trump may not face recession in his current term. But I see the US10 year headed to around 1.3 pct from current levels. That means we are not now penciling in some unforeseen event. The 3 year stint of Trump has not given any extraordinary growth in the US. What was already improving from the 2008 recession continued its trajectory forward which Trump falsely claims as his success. His tax cuts did not end up in any great investments and his tariffs amounted to tax on the common man- both big failures.This cost will have to be borne by the US citizens.China will be more able to bear the burden imposed but I feel US will be less able to do so . So maybe some slowdown is on the cards and maybe even a recession if production does not pick up. So we are heading for some more cuts from the Fed.Meanwhile if China retaliates in kind stock markets will tank and treasuries will rise. I think we are heading there. Do not expect Trump to change course as he is pretty shallow on world economics.
2
Dr. Krugman, I'm not sure your statement is true: "Republican faith in the magic of tax cuts — and, correspondingly, (believe) that tax increases will doom the economy." I think it's more that Republicans believe in serving their corporate masters. They are willing to run up debt, spend the nation's credit card--only to set up the next Democrat to clean up the mess. And blame them for it. Repeat rinse repeat.
416
@Ann Yes, at least for the Neo-GOP. But then the Neo-Dems seem to think profit motives are evil, that nothing good comes from corporations, despite the fact that nearly everything in life came from entities that sought a profit motive -- and of course taking other people's money for "services" is what governments like most too (the top monopoly with an army and police force to back up their business).
1
@David That is a bold statement: "Nearly everything in life came from entities that sought a profit motive." Most of our modern protections from profit maximizing entities came about through governmental actions that responded to the mobilization of the people: 8 hour work day, unemployment insurance, worker's comp, environmental protections, consumer protections, social security, insurance coverage for folks with pre-existing conditions, public education, infrastructure development, protections from discrimination, from fraud, etc.... The list is extensive. Without popular mobilization supported by governmental action private businesses would have never enacted such protections nor funded necessary societal projects. A society ruled by the profit motive alone, without a strong mobilized public and an effective government, would be brutal (and there are plenty of historical examples of this to study). I trust much more an entity in which I have the right of representation (government) over a private one, over which I have no effective control, and which responds simply and ultimately to its particular interest in profit maximization. The problem is not "government" but the buying of politicians by profit maximizing private interests. Take money out of politics and allow the people to set the priorities and we would move in a more positive direction.
57
@Ann
The GOP tax cuts are also used to cut programs that the republicans don't like by pointing to huge deficits. I believe it is actually the major purpose as they know supply side does not work. It is total hypocrisy of course since The GOP caused the huge deficits and is very socialist---just for corporations or their weapons programs...many of which are useless.
Moscow Mitch even passed a health care for horses subsidy.
35
As always, Paul Krugman’s columns consistently educate me, a novice in the field of economics. But I think it would be safe to include one more determining factor re the state of our finances. That is health care. Yes, the tax cuts have proven to be more than disappointing for the middle class. Yet, after Reaganomic’s “trickledown” philosophy, this is no surprise. The self-inflicted trade war with China seems to be a fool’s quest at this point. But increasingly unaffordable and inaccessible health insurance seems just as threatening to our quality of life as well as our pocketbooks. Trump at every turn is destroying our and our democracy’s welfare and quality of life. The Democrats running for POTUS must get their acts together when it comes to our health and that of our kids. We must not only save but improve the ACA, at least for now.
188
@Kathy Lollock I'm not sure the ACA is salvageable any longer. Too many fingers in the dough so to speak. It's not structured to be affordable as long as insurance companies can charge us according to our age, have high deductibles and monthly premiums, narrow networks that we can't go out of unless it's at our own expense, and the constant churn of providers and allowable medications.
We need health care reform but I'm no longer convinced that the ACA is the way to go unless, and it's a big unless, our politicians are forced to be in it with the same conditions we have to deal with and the same lack of assistance. Only then will they understand why people don't fill prescriptions, wait until they are deathly ill before going for treatment, and why it's so frustrating to deal with health care in America. Until they experience the same lack of consideration the rest of us receive they have no real incentive to improve it.
16
@Kathy Lollock It's because health insurance isn't like any other insurance. It's highly regulated and is more akin to a pre-payment health plan than a system to reduce risks of high expenses. It covers routine maintenance, unlike any other insurance. You can't get a really great rate by being healthy and living a low-risk lifestyle.
And MOST IMPORTANTLY, health insurance covers ever new technologies and medicines the come about. If you house burns down, you don't get to rebuild with the best new materials and appliances and carpet, that are then available.
3
@hen3ry Yes, I have my doubts, too. But it is a good starting point if we eventually want to get to single-payer. Even if temporary, something as easy as providing a public option would, could, make it stronger. I am thinking short-term until we can get the long-term fixes off and running.
9
This article - and "Trumponomics" as a term - has me perplexed. Krugman's point seems to me like asking how effective a toddler splashing in a bathtub is as a swimming stroke, and trying to compare it to the breaststroke vs. the crawl. It's not comparable, it's a toddler splashing to see how much noise they can make getting water all over the floor.
2
No matter how bad Republican economic policy is, the GOP will soon start screaming even louder for dramatic cuts to Medicare, Medicaid, and Social Security. Republicans will pump up the volume especially when a Democrat is elected in 2020. The hypocrisy of Republicans has no bounds.
10
I've never understood the GOP obsession with tax cuts---look what happened when W. was in office with his endless mantra on tax cuts. Krugman is right about this zombie approach to fiscal management, if you can call it that. In Trump's case he only knows one thing: spending other people's money freely and recklessly, with no accountability. This was true in his real estate days, ans it is now, but this time, it's the taxpayers who are footing the bill for his bad policy and irresponsibility. It's only when we have a recession that might spur people into a sense of reality; that we have a fiscally ignorant and stubborn president and GOP enablers at the helm who really know little about how the world works, as Krugman stated. We should be worried.
5
I’d suggest that Trumpists go look at Trump’s promises, then compare them to current jobs and growth figures. I’d also suggest that they a) find out what a “trend line,” is, and go look at the easily-found graphs detailing jobs, unemployment, and GDP numbers between, say, 2008 and now.
The problem is, they cannot read. And simple numbers and graphs, fahgeddabouttit.
The only real question is, as it is with Trump: total incompetence, or willful ignorance? I mean, are they stupid, or are they blind as bats for ideological reasons?
Anyway and briefly put: the economy’s currently doing okay, but it is—as today’s Times article on jobs for July says—cooling, with some warning signs. It’s certainly not close to what Trump promised in jobs, GDP, manufacturing, or anything else. In essence, it’s simply a continuation of what started under You Know Who, back when theRight gave a hoot about deficits and dent. The phrase, “reversion to the mean,” comes to mind.
I’d mention that it’s important to ask HOW this semi-prosperity was achieved—at what cost? With what risks? With what giveaways? With what consequences—but I’m not Sarah Palin.
I don’t want to make splodey heads explode, and Trumpists DO panic so at the very mention of, well, reality. They must be handled gently, given their TDS.
4
"Trumponomics" is more than a "political zombie," it's an economic one that is a massive transfer of wealth from the many to the few. And the tariffs which amount to a national sales tax add an additional burden to those already being squeezed. With auto companies already scaling back as sales decline and farmers battered by storms and tariffs, we may soon be facing a recession as consumers also pull back. So you're probably right that Trump will do what he's a master of and distract the media and the public with his outlandish racism to rally his base and hopefully distract Democrats, pundits, and the media from the total failure of his kleptocracy. The real campaign slogan is "Rampant Racism, Immigrant Internment, and Tariff Taxation" otherwise "Make America Groan Again."
4
@Paul Wortman. TARIFF TAXATION. Simple. Catchy. Easy to understand. Dems must start using the phrase.
These insight stand in contrast to Trump's bluster last night at a rally in Cincinnati. He touted our economy as the number one in the world; claimed that his tariff plans are forcing companies to manufacture in our country, filling the factories that had been deserted before he took over; that he is challenging China after 25 years of ignoring their abuses, and, by the way, President Xi is his good friend, and China has devalued its currency so they will be paying for the tariffs, not Americans; that by ending the flow of money spent on immigrants and on those in the inner cities, more money would be available to fix infrastructure. All of his shouted declarations were greeted by wild cheering from an adoring crowd that knew exactly when to cheer and when to chant "Lock her up". He left no doubt that critical comments such as those in this piece were fake news from socialists who are trying to ruin our country.
4
Trump does not need to turn to racism because he can't use the economy as a winning story. Remember, he lies and a lot. So regardless of the state of the economy, he will insist it is the best economy of any president's terms and that he alone did it all. He sees and lives in the greatness of Trump and he will just continue to tell bald face lies. Of course his supporters will believe his stories and cast their votes for our king.
4
Trump economic policies are, unsurprisingly, like Trump himself: short-sighted; blissfully ignorant of consequences; poorly conceived and poorly enacted; and enormously harmful in the medium- and long-term. This is not the issue.
Trump economic policies raise two issues: first, whether legislators have the courage to undo the tax cut (or a portion of it), and, for example, reinstate SALT deductions? But this will only bring us back to a (better) pre-Trump position. The second question is whether legislators will have the courage to actually raise revenues (by raising taxes, cutting spending, or both) when the costs of Trump's irresponsibility manifest themselves in the economy.
5
Krugman presents an accurate accounting of Trump's economy. Trump presents an inaccurate accounting of his economy. At this point the question is: which accounting will people believe? Will Dr. Krugman appear on Fox News. Will his columns be reprinted in tabloids? Will talk radio hosts continue to trumpet the great return of manufacturing? Will corporate big wigs and donors even care what Krugman says. If people don't come out to vote, we'll re-elect the liar and reinforce the purveyors of myth.
1
Paul, we all got a tax cut if you actually pay taxes. And let’s not pretend that the Democrats are suddenly against spending to add to the debt. Not one of the candidates is addressing the debt issue. It’s a shame that you are constantly rooting for the economy to fail after being wrong so many times.
3
If the tax cuts accomplished more than a minor and temporary uptick in capital spending, one could make the case that they had long-term positive effects. I suspect that the spending increases are more responsible for the uptick in employment. Here in the DC area the Pentagon is spending so much money now, I have a few friends who work for government contractors and they can't believe how much is being flushed down the toilet, project work that gets cancelled and replaced.
I found an interesting article:
https://fortune.com/2019/06/03/stock-market-trump-obama-sp-500/
1
that's the trouble with populism. you vote for the person instead of his ideas, if any.
Trumponomics failed because Trump is a failure as a human being. Putin, Kim, Xi and even friends like Netanyahu and the Saudis walk all over him with their flattery and behind the scenes laughter. He tries to do everything by himself and thinks he knows everything about. This is a formula for failure as he can never change course or admit a mistake or see the actual situation due to the size of his ego. Tariffs and tax cuts are simplistic answers to things and without thought they will simply lead to no real progress on our real economic problems.
4
The curtain has been pulled back and the naked “emperor” is exposed. Only his fig leaf is left to run on; racism. Rebuilding our infrastructure, reviving American manufacturing, reduce joblessness to near zero, all false promises. Blow-viations of a narcissist. Nearly 4 years of wasted time that will continue. Nothing will be done about addressing global warming with a cabinet post to address the crisis which could help the economy, form real alliances with countries, re fill all the empty ambassadorships around the world that he vacated, promote peace, not vilify. Stop tweeting. Please trump supporters wake up. He has given you nothing. Another 4 years will be a disaster.
4
From Mr. Krugman's Column:
"But why has Trumponomics failed to deliver much besides trillion-dollar budget deficits? The answer is that both the tax cuts and the trade war were based on false views about how the world works."
Comment:
trump's economic "views" seem not so much "false" as ignorant. (Thus also, not likely "evil" -- whereas ... sure as I am that he ever-so-'usually' will do evil when he knows what he is doing ... I cannot ascribe evil to that of which he knows naught.)
1
A flop?
We should always flop like this.
5
Don’t forget a key psychological Krugman-ism: sadoeconomics. Policies specifically intended to hurt others. The rest of us-non billionaires- have only our lazy selves to blame for being middle-class. Or worse! Poor. Nothing Mitch McConell likes better than drinking with rich donors and laughing about what he’s doing to the rest of us.
1
The failure of Trumponomics lies squarely with the House and the liberal media.
I hardly ever read or heard about the $1 trillion dollar deficit spending of the Trump administration in a booming economy. This is stimulus money stolen from future presidents, abused for boosting an already growing economy.
2
Bravo Paul Krugman. Please consider writing a piece about health care. We need some facts and clear exposition: no one is better at that than you.
1
Always amazed how right Dr. Krugman gets things. Clear he deserved his Nobel. How this will play out in the down and dirty world of politics and elections remains to be seen,since so many Americans stupidly vote against their own self interest ie. Kansas. If the economy really does sour then the old political tropes about "how are you doing" may come into play.
1
The only people for whom Trump's economy has been a flop were the ones stupid enough to listen to Paul Krugman's hilariously hysterical election night tweets about how the stock market would "NEVER" recover and an endless recession was at hand.
For those of us smart enough to ignore his childish tantrum, our 401(ks) have soared in value, our wives and adult kids who were struggling under Obama to find work are all employed in high-paying jobs, and we've saved on taxes.
4
Unless Professor Krugman finds a cure for stupid, Trump and the conservatives will have all they need. Their wealthy adherents know what is going on, but are profiting from it, while the other 38% just want to hear something vaguely racist they can chant to.
3
Calling it “Trumponomics” gives a certain amount of gravitas to what is, essentially, warmed over boilerplate Republican junk economic theory. A theory that is nothing more than self-serving rationalization for unadulterated greed and corruption of the national commerce.
3
The reason Repubs love and favor tax cuts is.....they will pay less taxes. Period. Everything else is a charade.
Things are fine for the people who matter...
2
Some of the comments speculate on Trump's motives. Simply put, Trump is a vulture preying on those he percieves as weak purely to feed himself both financially and emotionally using his reality television honed personality as his only tool. He is a man with no concience, no morals, no grief, no shame and no memory except for those whom he believes has slighted him. Again, he is a vulture living purely by his wits. So no, he has no mind for economics.
Democrats need to unite to remove Trump and McConnell and take control of Congress. And be smart about it before the next debates in September. Tom Perez and all the candidates should take control of the debate format and make it meaningful. So far we have been viewing more phony reality television concocted presumably by CNN and MSNBC. Move it to NPR and PBS and create a more traditional debate rather than the World Wide Wrestling format. And please, please, please... enough of the self-promoting celebrity moderators with their silly provocative simple minded questions. Select serious and knowlegable JOURNALISTS.
2
“Obviously Powell couldn’t say in so many words...” Obviously? What is obvious is that Mr. Powell wants to keep his job. That was surely the only reason for cutting rates.
I realize you detest Trump, and I also wish he wasn't our president. But this piece is simply why the public has lost trust in journalism. It's far too early to judge whether this administration's tactics are working. We are in the middle of the process. I highly doubt you would have judged any other president this early. Trump has lowered the standards of the presidency (and even decency). Don't respond to it by lowering your standards.
2
Trump doesn’t get it. Duh! Any revival of American manufacturing is credited to mechanization and robots: thereby eliminating social security, healthcare, retirement plan, unions. Maximize profits by minimizing workers.
1
Yes, it is terrible that as a result of Trump’s economic policies we have high unemployment, a sagging economy, millions who have lost their homes, and a crashing stock market. Oh wait, that didn’t happen. Maybe Trump’s policies prevented it.
3
Huh? A flop? I'm no fan of trump, but historic low unemployment, steady growth (historic length) including wages is not exactly all bad. Mr krugman, like so many on the left hate trump so much that it colors every word they utter making them suspect. Should his tax cuts be attacked? Absolutely. Should his decreased illegal immigration (despite the methods) be seen as decreasing the cheap labor supply and helping low income Americans? Yes. This is like health care. To the right, anything connected to Obama is "terrible" and has to be replaced. Anything attached to trump is treated the same way on the left. Try something different. Offer fixes for the bad parts and acknowledge parts that work. That's what adults do. It's what the democratic hopefuls aren't doing.
2
In opposition, Republicans are apoplectic about Democratic administrations running deficits. How many times have Republicans threatened to shut down government over increasing the borrowing limit? Obama was harshly criticized for deficits while extricating the U.S. from the worst economic downturn since the Great Depression.
Trump is running massive deficits to turbocharge the economy during an economic upturn. This is the exact opposite of good fiscal policy. Republicans are mum on the issue. Blatant stealing from future generations to provide Donald Trump the appearance of a strong economy is grossly unwise, yet Republicans defend it.
Trump's business life is nothing more than an ongoing series of scams designed to bilk unwitting people out of their money. As president, he simply has a much larger sandbox to play in. Every American, particularly those not even born yet, will pay dearly for Trump's deficit scam. He will simply laugh at the chumps who fell for it.
2
It must be tough to be Paul Krugman. The emotional dissonance has to be exhausting.
Because we all know he is in that category with the 'Republican Fat Cats' he reviles who have clearly done very well under Trumponomics.
It would be an act of journalistic honesty for him to disclose his net worth on election night and today so we could see just how much of a flop Trump has been for him.
It must be a psychological grind to open those quarterly 401(K) statements showing he's pocketed another six-figure increase in the past three months, while affecting the professional guise of populist working-class hero.
There's a word for a guy like Krugman. He applies it to Trump all the time.
2
Magic Dollar Tree is a pure Fantasy.
"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."
Come again? Haven't you got that backward?
If Trumponomics had been a big flop, we would have expected more than a 1/4 % cut in interest rates AND we would have expected the Fed to stay on course with its program of additional rate cuts. But Powell poured cold water on that prospect.
The economy remains stubbornly resilient in the face of a world economic down-turn and trade wars. Might Trumponomics not deserve a teeny bit of the credit for that?
2
The unemployment numbers are garbage. I know too many people who've "dropped out" completely, no longer filing for
or collecting benefits, not really looking for jobs, especially as companies want to hire 28 yr olds and not 48 yr olds, utilizing sporadic gig economy jobs like Uber and other exploitative work to get by. We ALL KNOW friends and family in this situation. We ALL KNOW the economy is only good for the owning and investing class. The rest of us might be seeing a wage increase...that's going to pay our skyrocketing insurance premiums, co-pays and "co-insurance." It's all garbage. Nationalized health care (the added taxes would likely be far less than our monthly premium folks!) and education should be priority one!
3
Soaring stock market. Unemployment - according to the NYT homepage - at 3.7%. Yep, that's definitely a flop. Perhaps the oft-wrong, but never apologetic Mr. Krugman might consider another profession?
4
Because there is no science in economics.
There are too many variables and unknowns to craft the double-blind experimental controlled tests that provide predictable and repeatable results that are the essence of scientific.
A field that contains Karl Marx, Milton Friedman, Vladimir Lenin, Mao Zedong, Arthur Laffer, Paul Samuelson and a certain NYT Op-Ed icon is made for late night comedy and ' Family Feud' cable TV.
By failing to declare and disclose and divest his personal assets into a blind trust you can't tell where Trump Mar-a-Lago ends and Trump White House begins. That is the only economics that Trump knows nor cares about since he wisely chose a New York City real estate baron daddy.
No collusion! MAGA!
Trumponomics failed because Trump is a failure as a human being. Putin, Kim, Xi and even friends like Netanyahu and the Saudis walk all over him with their flattery and behind the scenes laughter. He tries to do everything by himself and thinks he knows everything about. This is a formula for failure as he can never change course or admit a mistake or see the actual situation due to the size of his ego. Tariffs and tax cuts are simplistic answers to things and without thought they will simply lead to no real progress on our real economic problems.
All economic theorists are muddled in their thinking and doing. That's Axiom #1.
Moving on regardless: The Trumponomics brouhaha is a mess, and so is the Krugnomics "Cacophony" of tired alternatives.
Do you seriously believe, sirrah, that increasing taxes and decreasing tariffs are the right answers? Seems to me that's been tried many times before and to little avail...save more money in our tax coffers for more liberals to spend on the doles needed for their being re-elected.
Methinks you've Trumped yourself!
1
One significant reason for the tax cuts was to stop "inversions", US companies moving their HQ overseas to benefit from their lower rates. The Wall Street Journal reported yesterday that it is working as planned.
3
"So he’s probably going to have to do what he’s already doing, and clearly wants to do: run on racism instead"
Krugman wants to hammer on Trump and his supporters with the cry of "racism".
You want to thwart this supposed path that Trump is taking?
When I talk to Trump supporters in the Metro Detroit area about the forward-thinking threads appearing the NYT with respect to race and the racism in flyover country there are immediate challenges and questions.
Latching onto the Kamala Harris declarations about busing, they will ask about NYC public schools.
Are NYC public schools racially integrated? Are NYC public schools subject to any federally mandated integration programs? Amazingly they can predict the answers. Many working class families were hurt by busing schemes that were implemented in Detroit and Pontiac.
If Krugman is so interested in "racial justice", is he using his position to hammer on the good people of NYC regarding their racially segregated public school system? It seems like this would be something a racial justice warrior should concentrate on and work tirelessly to remediate.
An alternative is for Krugman, his followers and the Democratic Party to start being honest about their own views on race, racism and "racial justice". That might begin to bring back the broad coalition of voters the Democratic Party once represented.
Or Krugman can continue to hammer on the folks in flyover country.
And there's no dog whistle to it.
Dear Trump supporters:
If you can't see the con, you're the mark.
4
Mr Trump has no clue about anything other than what satisfies his narcissism. There is no limit to that. In fact, feeding his own narcissism appears to be the only motivator for Mr. Trump at all.
Mr. Trump, when not wasting time golfing or watching FoxNews or gorging on cheeseburgers or sitting on the golden toilet late at night, twittering away, tries out new variations on racism or similar at weekly white supremacist tent meetings, somewhere in the hinterland, where camp followers will show up for the show and entertainment, entertaining for them, if for no one else.
The one talent that Mr. Trump possesses, a negative talent, but a talent nonetheless, is self-promotion. Thus, that is all that Mr. Trump ever does, self-promote. With regard to the national economy and trade matters with China, Mr. Trump's brainless boasting at the moment is (1) that he, personally, is supposedly ruining the Chinese economy, (2) he is again, personally, bringing tens of billions of US dollars into the federal government from tariffs. Trump supporters will repeat this ad nauseam, despite the fact that the truth is the opposite.
1
Be patient, Paul.
You're looking for instant gratification, and the world doesn't work like that.
Or is it that you're pursuing the Times' standard gambit against our President, always trying to portray chaos and failure, where it doesn't exist.
1
And yet your own newspaper has as the lede today, "U.S. Added 164,000 Jobs in July; Unemployment Rate at 3.7 Percent." How is this a flop? I am not an economist. Obviously the good news is not distributed equally, and I bet many of these jobs are part time or minimum wage. But Trump will have powerful ammunition going into 2020 if this continues esp if his opponent comes from the "blame whitey for everything/BDS/Reparations" wing of the opposition.
1
A policy will always be a flop if on ly the rich gt richer, but the poor get poorer. If we don't do something about it, by voting, there will be wide spread violence in the U.S.
1
Another opinion piece from a long line of Leftists who hope and pray our economy fails to help the Dems chances in the 2020 elections.
1
"Run on racism instead." What quality tropes this guy has a penchant for crafting.. He should put his alleged Nobel Prize back in the Crackerjack box he took it out of. Still waiting for his apology for predicting recession and stock-market tanking if Donald J. Trump were elected president.
1
Maybe they are working. Null hypothesis
I love that phrase you used, policy by whim. That sums up Trump's "decision making" perfectly.
2
I was recently in a household in which the TV was tuned to Newsmax, and Fox almost exclusively.
What I heard was "communistic socialism", "ungodly", and "femlibs".
While Prof. Krugman is right, the right don't care.
2
The Republican Tax Cuts were not intended to spur the economy, but to make the rich richer and the poor poorer. Their thought is, damm the people, the country, the planet, the future, we want to have more money in the bank, bigger yachts, more jets, more power over our fellowman.
The tariffs are not meant to deter China because China it is not paying for them, but to collect taxes from the consumer , 30 billion and counting, to substitute the cuts given to the 1 %,
1
Paul Krugman helps us to learn about the successes and failures of American politicians. As we have witnessed, beginning with Reagan, Republicans are obsessed with magical thinking economic policies, useful as deflections from undermining the resources necessary to run a government. Trumponomics, like Reaganomics promotes illusions based on wishful thinking. The later was based on actual manipulation of busting unions to signal to wealthy corporations, that they could cut labor costs to pre-industrial wages, where the former is based on an unqualified idiot who listens to whoever strokes his ego. Our current economy is run by algorithms that are dangerously synced with bubbles and will burst, whether Trump stays in office or a Democrat wins. Either way, history tells us in the long term, we're doomed to experience a Recession, but more likely a Depression, given all the debt the USA has incurred. What does Paul think about that scenario?
1
The difference is republicans play hardball and make sure their base is enriched with money by the things they do. Democrats don't do that , instead they preach principles and moral obligations while Republicans exercise "economic eugenics" on anyone that goes against them.
I'd rather ask: How is it Paul Krugman is yet to be proven right on anything he predicts?
1
Two things get Trump re-elected:
1. Economy
2. Media
1
You wrote: "So he’s probably going to have to do what he’s already doing, and clearly wants to do: run on racism instead."
This is the type of fake news that you and the left-wing media propagate and Republicans resent. When nothing else works, weaponizing racism is the best alternative. Pointing out the fact that big cities are in horrible disrepair is not racists. The fact that most big cities happen to have been run for decades by black politicians doesn't make that observation racist. The Feds have pumped Billions into cities like Baltimore yet the city, the inner city, is a disaster. The Math and Reading competence of their high school grads is at a disgraceful level. Apparently, 0% of grads pass the tests. Where is Cummings? Well, today, he's filling out a police report about last night's break-in and robbery of his home.
2
What’s he going to run on? You’re kidding right?
He’ll lie outrageously repeatedly with gusto about big and small things. The conservative echo chamber will rinse and repeat over and over to justify his stupidity as well thought out.
And the MSM will twist itself into a knot of whataboutism.
Of course it will also be racist which doesn’t exist in his supporters minds.
And he’s 50/50 to win.
1
“Since everything is political these days, let me say that pundits who think that Trump will be able to win by touting a strong economy are almost surely wrong.”
There are a number of reasons why Republicans keep “winning elections.” Poll after poll shows that tax cuts for the wealthy and large corporations, making cuts to Social Security, Medicare, and Medicaid, and other disastrous Republican policies are NOT popular. Republicans are good at using wedge issues, but there is more at play here.
If our elections were "democratic," i.e., if our votes were counted by hand with observers present as other major countries do, many of our election results would have turned out differently. Our State Dept. uses exit polls to verify elections in other countries. As a result, elections have been overturned in Ukraine, Serbia, Georgia, and Kenya. Exit polls are used to announce election results in other countries before the vote counting is complete because they "fall within the margin of error." Many of our exit polls have not since we moved to computerized voting. In addition, democratic elections require that the vote-counting process is transparent and secure. The opposite of what we have today when our votes are counted by private companies with ties to the far right using proprietary software.
NYT Magazine Cover Story: The Crisis of Election Security by Kim Zetter https://tinyurl.com/yczwsupq
Europe Rejects Digital Voting Machines https://tinyurl.com/yczjwo64
8/1/2019 9:02pm
1
This column about says it all. Pay attention voters.
Trumponomics is a flop because he is a fraud who has sold the country a bill of goods.
Click the link “mainly an illusion”. Very eye opening.
Trumponomics a Flop?
I challenge Paul Krugman to list his net worth on the day Trump took office. Then list it now. After all, Trump's policies have only benefited Republican Fat Cats Paul - not populist, working-class heroes like you.
Let us know: How much have you personally lost under Trump?
Or if you prefer, take this wager:
I will give you one dollar for every dollar under $1 million in net worth you have. But if you are better than a millionaire, you give me one dime for every dollar over that amount you've made just since Trump took office.
Maybe you took your own advice on election night and got out of a market you said would NEVER recover because of Trump's election. If so, you can blame your flopped financial state on yourself, not Trump.
More likely, you've made a pile in the last three years, just like all those evil Trump supporters you vilify. That makes you a phony and a hypocrite.
2
Republican economic theory using tax cuts has proven to be a failure for almost 40 years, reaching a zenith in Kansas. Trickle down is a failure for the working person. https://www.pewresearch.org/fact-tank/2018/08/07/for-most-us-workers-real-wages-have-barely-budged-for-decades/ Yet Republicans persist in believing their fairy tale and a certain segment of the population believes in fairy tales.
1
I've yet to see why it is Paul Krugman races to rhetoric about the current US economy, other than to trash the President.
It's certainly not because Mr. Krugman knows our country better, because it takes only a cursory look into his breathlessly errant columns to see that, so far, he's been 100% wrong about every economic prediction he's made and every observation he's myopically made.
It's evidently sufficient for him to live off half-truths, outright lies, or plain hatred; we should expect better of the touted economy columnist, but this truly bad penny keeps showing up.
The Republican tax cut mania, that persists through failure after failure, was never meant to stimulate overall economic growth. They only say that for cover.
Let's talk about what it really is: the taking of money from the Federal treasury to give to their rich supporters and rich politicians in the Republican Party. On a moral basis, this is called theft.
2
Paul Krugman is wrong on one point. The Trump/GOP tax cuts and tariffs HAVE worked EXACTLY as intended. They have continued to concentrate wealth and power in the hands of Americas .1 percent. Please don't pretend that Republicans like Paul Ryan were ever making serious policy proposals. Their tax cuts and tariffs were never intended to support the public good.
2
The Republican tax cuts were never a policy, even though they were rationalized that way. They were a blatant giveaway to big business and the wealthy 1%.
I believe that there is no basis for the word "faith" in the phrase "Republican faith in the magic of tax cuts". Neither faith nor reason nor observation of experimental facts seem to be involved.
"Tax cuts" is just something that Republicans seem compulsively or reflexively do, perhaps by rote or in obeyance of command. Cult behavior, possibly, as evidenced by the mindless, lockstep support of the Trump.
It would be interesting to trace the history of this defining characteristic.
1
Tax cuts as a policy zombie is correct but, Republican lawmakers consistently have hidden motivations. I understand the author’s hesitancy to speculate as it isn’t a good practice for a reporter. But, I cannot help but see a trend where past Republican presidents tank the economy in favor a few, which in turn dictates how Democrats respond. That is, Republicans have found a way to maintain power even when they are not in power because Democratic presidents always have the precedent of repairing what they broke.
As a baby boomer I have been around a long time. We have been hearing the same economic arguments my entire lifetime but we are no closer to finding the answers. Do tax cuts help? Does raising the minimum wage hurt? Is it important to balance the budget? Etc. These are the basic questions faced over and over by our leaders, yet their answers are based on competing theories unsupported by hard evidence. Alhough these questions have been around for decades economists are unable to them - it truly is the dismal science, although even using the word science gives economics more credit than it's due. Add to the mix that so many economists are mere servants to political and commercial interests, and espouse whatever position benefits their patrons. Why do we listen to these people? They are clueless.
1
So how do you attack Trump's economic record?
1. Budget deficit up 60% in 2018 and 40% for 2018-2027, vs. CBO forecast when Trump was inaugurated, due to his tax cuts and additional spending. That's $34,000 more in national debt per household due to Trump's policies.
2. Job creation faster in Obama's last 30 months than Trump's first 30 months. Employment level gains (an alternate measure) basically stalled in 2019, with only 50k more employed through June as opposed to 2.9 million more for all of 2018.
3. About 2 million have lost health insurance since 2016, due to Trump's ACA sabotage, with 2017 the first year with an increase since 2010.
4. Tariffs have cost the average family about $400 per year so far, $800 if all of Trump's threats are implemented.
5. Real wage gains were faster in Obama's last 2 years than Trump's first two years, mainly because inflation is higher under Trump.
6. Gas prices and mortgage rates were lower in Obama's last 2 years than Trump's first two years.
7. If you take the average of the 10 quarterly real GDP growth figures under Trump you get 2.6%. If you do the same for Obama's last 10 quarters, you get...2.6%.
Yes, the facts have a liberal bias.
10
Baby Boomers have comprised a large group of Americans. As they leave the workforce due to age or death the number of people coming into the workforce is fewer. The unemployment rate has decreased in recent years. The method of computing the unemployment rate is no longer valid as an indicator of the health of the US economy. There are many jobs up for grabs but the number of job seekers is declining. The president likes to claim he is responsible for the best economy in US history. But as the reduction in the number of prospective employees inevitably returns to normal, the unemployment rate cannot be compared over the long term. The oldest of the boomers are 74. The youngest are 54. There are still many boomers in the work force. We still have a long way to go before the unemployment rate is meaningful again as it relates to the health of the economy...
2
"Neither tax cuts nor tariffs are working". NOT TRUE! The 1% have prospered mightily under Trump and the burden was successfully dumped on the 99% so Trump's goals were achieved.
Unfortunately for me and everyone I know, we're not oligarchs so Trump's policies aren't working for us but they are working for the people who bought Trump the WH.
Powell did the same thing many pilots do on final approach. Add a little bit of power to arrest descent. The world economy is declining, which Trump cannot afford, so asking for more juice serves his reelection.
3
Paul Krugman may have a PhD in economics and a Nobel Prize in Economics but what makes him think he knows more about the economy than Donald Trump who has already told us that he, "the very stable genius", "knows more about the economy that the economists." Surely we all believe Donald Trump! Donald Trump would never lie to the American people. He is, of course, the most successful, most wonderful, most beautiful leader the world has ever known.
2
This reminds me of a phrase that took off just before the turn of the century. "Perception IS Reality."
Trump keeps the market going up by buybacks enabled by his tax cuts, and points to that as the key indicator of reality. That people cannot afford what they need or the infrastructure is crumbling or the underlying strength of the economy is damaged by tariffs, or that the world is heating up and causing forced migration or that he is forcing our former allies into uncomfortable compromises which harm our relationships and make us unacceptable partners, .... all of that doesn't matter because his Fed Chair will ultimately push down rates to goose the market whenever needed. It's worked before and will work again until it doesn't.
He cannot file for bankruptcy protection this time and we are all in the soup with him.
Thanks for reminding us, Paul.
4
There is no "trumponomics", only random tweets. If you mean why did the tax cut fail to produce the promised results the answer is quite simple: we are on the wrong side of the Laffer Curve. The traditional Laffer curve puts the apex at around 50%. In fact, studies suggest the true apex for the 1% is closer to 85%. In other words, at tax rates below 85%, reducing tax rates reduces revenue from the wealthy. Period.
No one, including Republican leadership, expected this to work. It was only to help their billionaire overlords.
3
Last I checked, renewable energy requires manufacturing the equipment that makes it possible.
We do not need to wrap domestic industries or companies in bubble wrap, but if we collectively stop making stuff we will probably not like the consequences.
1
What gives me the heartburn pause, everytime tax cuts for the wealthy are mentioned is the "starve the beast" and "privatize the (misnamed programs) entitlements." The significance of these three areas of our nation's economics is self evidentiary in how well the "people" will live. Going down the republican path is a belt tightening misadventure. And this is the most optimistic thing one can say about it. Having the lion's share of money flowing in this direction to private entities is nothing less that economic suicide for the average middle class person and whatever family they may have.
Giving money away from the rest of the population, diverting it directly to the ultra upper class has no positive impact on the nation's well-being. We might just as well send the tax cuts (bonus money just for being rich) down an active volcano. Or they could use it, the Benjamins as wallpaper for interior design.
But what about the Democrats' plans? What we know is that, based on modern history, is a repeal of the republican embezzlement scheme, and with control of Congress, start fixing the broken down America. Don't deny what your own eyes plainly see. Potholed roads, dilapidated public schools , improving Affordable Healthcare, negotiating with pharmaceuticals to lower prescription drug prices, include a public option for health coverage, and generally bringing out the most secure future for all Citizens. Then that's what will return our pride and self confidence with a greatness.
3
@C. Coffey. It is a classic three-card monty. The wealthy have us so focused on whether the villain is welfare queens, or the Chinese, or the socialists, that we don't notice them picking our pockets.
2
Can you imagine what the economy would look like if Trump had not inherited a rising economy? He would have done exactly what he has done, and caused a recession right away. He is just feeding off his predecessors success at turning around a disastrous Republican economy. But he is trying hard to bring back the usual Republican disaster. Give him credit for that....I guess.
1
The only "magic" Republicans expect from tax cuts is burgeoning federal deficits they can exploit as a reason to blame and then attempt to eviscerate social programs such as Social Security, Medicaid, Medicare and food stamps.
4
Trump never meant for anything to come of his policies apart from giving the rich more of the country’s wealth and make the majority pay for it. He and the Republicans accomplished their only real goal. It’s not like anyone in his administration believes his policies are meant to stabilize the economy or deliver any benefits to the average American. Their only concern is themselves and capturing all of the country’s wealth.
3
Um . . . declining business investment? Wasn't that big, beautiful tax cut supposed to SPUR business investment?
1
Paul is right, and it's certainly possible that the recession won't hit until after the election. But nothing has been fixed by giving all that money to corporations who simply stash it away,
The presmise that corporations ever paid the rack rate in taxes was totally flawed, and everyone knows that large corporations have bevies of lawyers and accountants who work every loophole.
As for the average Joe (or Shmo), we get the crumbs as usual.
3
"On trade, [Trump] has broken with his party’s free(ish) trade policies, imposing large tariffs that he promised would lead to a revival of U.S. manufacturing."
Not so fast. There are two possible reasons why Trump raised tariffs.
1. He believes that tariffs will "revive" U.S. manufacturing.
2. He is bluffing.
Why might he bluff? Presumably, if other countries are persuaded that he believes in the tonic effects of tariffs, they will be willing to offer greater concessions to get him to hold back from imposing them.
If 2 is correct, then Krugman has fallen for Trump's bluff. He is collateral damage to a bluff that was directed at China and the EU.
Also, if 2. is correct, and Trump is bluffing, then it is far too early to declare victory or defeat. We likely won't know the result until AFTER the next election, and very likely later than that. But Krugman apparently can't see more than a few months ahead.
In the case of China, that country took the risk of tearing up what would have been a real deal, so now it obviously can't afford to lose face by kow-towing to Trump. Since it can't be seen to hand victory to Trump, we are on hold until after the next election. But Trump's successor (possibly DJT himself) will inherit a strong bargaining hand that has a chance of winning real concessions even if they are disguised in diplomatic mumbo-jumbo. It's the well-known bad-cop, good-cop routine.
2
Simply put: there is no "trickle down" affect, EVER, when "corporations" (Citizens United has made the quotes requisite) are GIVEN more money, in the guise of "tax relief". That concept is, and has always been, a HOAX.
Yet we see, daily, repubs actually attempting to use that false ruse as justification for the absurd tax giveaway the "tax cut" was, with worsening affects, in the form of astronomical debt increases and stiffer taxation for the 99%, built into the legislation.
Capitalism has only one principle: ROI. There is NO "corporate largess" when it comes to money. None.
The easily foreseen stock buybacks that resulted from the "tax cut" should have put the obvious illogic of "trickle down" front and center. There will NOT be a return of manufacturing jobs, not when costs here are higher. That should have been clear to all.
2
The China thing will magically resolve next summer - in time for a pre-election bump in 401ks.
1
Arguments like Krugman's reach only a tiny number of people, and the majority of them have at least some idea of how the economy works and the effect that taxes and tariffs can have.
Most voters don't know anything about the economy. Trump says, "I've created the greatest economy in the history of the world," and they believe it. They don't know any different. They don't even know what it means to have a good economy vs. a bad one. If they're looking for a job and they find one, and at the same time Trump claims that the unemployment figures are the lowest in history, they think he's brought about the job they got. Forty-five percent of the electorate listens only to Trump. What he says is what they know.
8
My company has had a slow down this year but I'd say it's mainly because we have saturated the market for the equipment we manufacture due to the past few years of a booming market.
1
Since Reagan, conservatives have sought to give to the few at the expense of the many. They continue to be regarded as fiscally responsible because they play hardball tactics with "facts". Once democrats learn how to speak in short bumper sticker sound bites of truth and repeat, repeat, repeat..maybe that will change.
4
Same old Krugman. The economy is doing as well or better than under Obama, but "Trumpanomics" is a failure and "Obamanomics" was the best thing since sliced bread.
As for the trade war, it's goal is to force China to act according to reasonable norms. The tariffs apply to a fraction of a percent of international trade.
2
Same old Trumpists. Trump promises them the moon, screams how much better he’ll do than Obama, none of that happens, and they meekly glug more koolaid.
1
@kwb
kwb, thank you for demonstrating the ol’ saw: “Ignorance is bliss…” Trump was handed an 8 year foundation on which to build an economic success or failure. Obama was handed an economic disaster created by the outgoing Republican party. Your boy just signed a budget adding nearly 2 trillion to the national debt. Now there are two things Republicans have ZERO authority to talk about: Morality and the National Debt.
1
To look forward and avoid distracting haggles about Dr. Krugman's politics what is Dr. Krugman's assessment about how the prospective Democratic candidates are addressing an economy living on deficit spending, borrowed money and faulty models about trade? More generally, the Democrats are shocked when Republicans change their tune about deficits under Democratic administrations and majorities. How are Democrats preparing for the inevitable Republican reversal on deficits?
2
There are different models of taxation. George Bush Sr called the Reagan tax cut model as voodoo economics and I don't know what to make of it as those were my student days. With regard to the tax cuts of Trumponomics, compared to the bail outs to the too big to fail wall streeters during the George W. Bush years and continued in the form of stimulus to useless companies like Solyndra during the Obama years, allowing tax payers to keep some of their hard earned money during the Trump tax cuts was most timely and appropriate. Not only that, only those who were taking the simplified standard deduction benefited from the tax cut and simplification. Those trying to evade taxes using loop holes found no benefit and some of them even ended up paying higher taxes. Consumer confidence is high, the retirement portfolios are better.
With regard to tariffs, all previous presidents before Trump and pundits have been talking during their campaigns about how China was not trading freely but when they had an opportunity to do something they were impotent. Give Trump credit that he at least tries to walk the walk and not just talk the talk. Maybe Tariffs may not be the best solution to get all nations to comply with free and fair trade but at least one needs to give an A for trying. Also it is not over yet the trade war is still ongoing and at best it is a stalemate and China has been put on notice that it either gets on board on fair trade or watch its golden days turn to coal days.
2
Among the other absurdities here, you kinda forgot that the primary recipients—and I am talking north of two-thirds—of your precious tax cuts were the wealthiest and their corporations.
Oh, and this just in: TPP, which your boy blew up, would have reined in China and provided a solid trade deal.
Reality is such a pest, ain’t she?
2
Please, Dr. Krugman ,tell me if you think it plausible or likely that Trump tariff antics are in part designed to cause a drop in the stock market so that many around him , privy to his intentions, can make impressive gains in their fortunes? Alerted, even by only moments, one might short the market, banking on the near certainty of profit that would result? It would follow, then, that by September, Moscow Don will have backed down, having duly warned his cronies, so they might again cash in . Just saying.
1
If a democrat had the same economic record as Trump does, PK would be praising it to the skies. Unfortunately none of them ever have had such a record and the current crop of candidates look like they want ever bigger government, higher taxes, and more regulation of businesses. A recipe for disaster......
4
Obama had better employment growth and the exact same rise in stock market indices while decreasing the deficit from 2009-2016 AFTER averting an all out depression.
He served Trump a frosted ice cream cake to which Trump added overpriced whipped cream and claimed he baked it himself.
The percent of US GDP contributed by manufacturing was in the low teens in 2018. Manufacturing offers more opportunities for value to be added though technological advances than, say, food service. So manufacturing is very important. But we sent manufacturing to other countries to take advantage of low wages and nonexistent environmental protections. That left us with lower valued added jobs here for millions and those jobs are unlikely to ever come back. I am not sure we really want them. A bright spot in our economy has been the expansion of knowledge workers, though AI now threatens those workers too.
The Republican plan for the national treasury is clear. After they slash it to the bone with their rich folks tax cuts, they will announce that we can no longer afford Medicare and Social Security at their present levels. The old dudes will wish they could take back their support for the Republicans. That party will suffer severe damage but too late to do any good and the old dudes won't understand the situation anyway.
5
" ... Imagine how much better shape we’d be in if the hundreds of billions squandered on tax cuts for corporations had been ... "
squandered on tax cuts for lower- and middle-class taxpayers. At least the money would have been injected in the real economy, where recirculation phenomenon would have multiplied the effect. And who knows? That multiplier might have been large enough to encourage job growth, wage increases, maybe even some capital investment.
1
Krugman should be a bit more nuanced in his assessment of the effects of taxes. First he says that tax hikes don´t cause a depression and that tax cuts don´t deliver booms. Yet, he asserts that "there is a good case to be made that Trump´s tariffs have actually hurt manufacturing." But tariffs are taxes. So, where are we? Krugman knows that all taxes impact private decisions, some more than others. He should be more nuanced.
1
If a democrat had the same economic record as Trump does, PK would be praising it to the skies. Unfortunately none of them ever has or probably never will.
2
@George Fisher Maybe you need to do a little research:
http://evonomics.com/economists-agree-democratic-presidents-better-making-us-rich-eight-reasons/
Actually Obama’s was better in most ways, and Krugman was critical for good reasons.
Of course to know that, you would have to, you know, read stuff. It would have Big Words, too.
@George Fisher I have been following the good professor for years. He is equal opportunity when it comes to moronic economic policy whether it be from a Democrat or Republican.
2
There is no longer much need to critique tax cuts for the wealthy and corpporations as anything more than GOP service to their paymasters.
There is no economic rationale. There is no consideration for the public good. I don't even believe there is interest in strengthening US economic power relative to other actors. It is just service to an emerging oligarchy that creates massive wealth and kills productive capital.
2
@GR. If it’s creating wealth, how is it killing productive capital?
The tax cuts did work, and the minority who own a lot of stock are much better off. The rest will have to pay the deficits down eventually.
The tariffs? Hard to see any benefit for anyone, but the spin machine may not be fully on.
4
I'm not sure what your definition of 'flop' is Doc, but certainly by most measures Trump's economy has been successful. Employment growth, particularly for the least skilled, has been spectacular. GDP growth has been solid, vastly outpacing all 8 years of Obama's command and control. Inflation remains a non-issue. Incomes are up across the board. The point is that there is MUCH that is positive to say about the Trump economy and to suggest otherwise is partisan nonsense
That's not to say that it's all moonlight and roses. Big tax cuts without reasonable spending offsets produces deficits and the G.O.P. has been grossly negligent on controlling spending (I expect spending negligence from Democrats). Similarly, Trump's trade policies are reckless and irresponsible. Tariff wars hurt everyone involved and I agree with you that the Fed is being too accommodative.
The problem, however, are the Trump alternatives. The policy positions being advanced by the cabal of social leftists vying for the Dem nomination would amount to a declaration of war on prosperity. Their overt hostility to private enterprise and capitalism in general is horrifying and the costs of the left's declared priorities would make Trump's and even Obama's deficits look like rounding errors. Moderates, independents and rational partisans simply won't stand for it so unless you have an economically sane Democrat ready to step out of the closet I suggest that you prepare yourself for a two-term Trump presidency.
4
"GDP growth has been solid, vastly outpacing all 8 years of Obama's command and control," you actually believe that. Obama produced yearly number equivalent to trump's and quarters far surpassing trump's.
"Big tax cuts without reasonable spending offsets produces deficits." Same wrong argument every time. If the cuts actually provided the economic boost the GOP claimed it would the corresponding cuts wouldn't be needed.
1
By GOP design, the next Democratic administration will likely face a recession.That will make it impossible to reverse the tax break on corporations and the deficit will balloon. Republicans will then call for drastic spending cuts for everything except the military. There will be soup kitchen lines around the block, the FOX pundits will put the blame on the Democrats and hungry mobs will call for an authoritarian "leader". Weimar Republic 2.0.
3
Oh Paul... the tax cuts were just a lagniappe-- icing on the cake . Most of us know it's all spin..
Some of us like tariffs if only because maybe people will buy less in the throw-away economy. (Use last year's crayons this year.. Not get new reading programs every three years -- which is about how long it takes for a teacher to fully implement a new program!)
Some of us would like to see a luxury tax reinstated to go along with the tariffs.
And there was the present to the farmers, who produce our picture perfect rock hard inedible fruit and expensive veggies.. of the 26 Billion. Of course, they are also paid not to grow things.
Please explain why a low growth, zero growth or negative growth economy (Less growth -- that must be a war economy?) is a "aaad" thing.
"At this point we’ve basically returned to pre-Trump rates of growth."
If that is true, then given all the international headwinds and the fact that we are coming off the longest unbroken recovery in history, isn't that grounds for shouting "Hallelujah"?
Aren't you playing fast and loose with your counterfactual?
3
How is pointing out that business investment and manufacturing are in decline, and tax cuts running up trillion dollar deficits playing fast and loose?
3
It all depends what your your party affiliation is. Remember when balancing the budget was a good thing.
Uber fired 400 managers so they look good to Wall Street and it's CEO goes on Ted talks and sounds like a Justice Democrat Warrior should on workers rights. A pocet knife cost 20 dollars in 1970 cost 15 dollars now. Bernie wiped the walls with moderates and Trump gonna win in 2020.
Not that it matters.
Republicans have been pushing for tax cuts for the rich as long as I can remember, no matter what the economic situation. Remember Paul Ryan?--didn't matter if we were in a recession or boom, cutting taxes for the rich was, and is, their one answer for every situation. It had nothing to do with actual results on unemployment, middle class wages, or any concern other than making the wealthy richer.
1
I dunno. He may be able to win by touting a strong economy. With him, there doesn't actually have to be a strong economy; he just has to say there is and his supporters will believe it, and maybe enough fence-sitters to put him over the top.
Trump is the opposite of Detective Joe Friday (I know I'm dating myself here). Friday said "just the facts ma'am, just the facts." Trump wouldn't know a fact if it hit him in the face, and doesn't care.
5
Straw men should be easy to knock down. But Mr Krugman is not even up to that task. It’s quite simple: if a Democrat was president (and a rRepublican had been president instead of Obama), Mr Krugman would talk about the economic wine the Democrat had made from the sewage water the Republican had created. The Trump economy has been good for our 401k’s, our jobs, our mortgage rates and pretty much everything else the unwashed masses across this country care about. The story of these first 2 decades of the 21st century is how the Dems and the left have become the party of the upper classes and the GOP the party of the poor and middle class.
2
My personal theory (I can't demonstrate with hard facts) is that extreme inequalities are driving the wave of madness which is currently afflicting western democracies.
I am unfortunately not getting younger, but I remember a time where people were happier in my little corner of North America, a lot more optimistic, a lot less angry and had rock solid confidence in the future.
In some ways, the world was scarier than now, but nothing could shake that positive feeling.
Those days seem long gone. Its now the other way around.
Could it be that the fact that most people see their condition stagnate or worsen, that they do not personally benefit from economic growth, live from one paycheque to the next and are one doctor bill away from bankruptcy be a factor behind all this?
Could it be that the fact that more and more resources are used for the exclusive benefit of a very small number of people on a massive scale be another factor?
I was never a "socialist" (this does not mean the same thing here than in the US, your Bernie would be just another "normal" politician in Canada), but I am starting to wonder if the erosion of the economic rights of workers and of the middle class is not the main driver behind the moral bankruptcy and collapse of the West.
If my theory has a grain of truth in it, it means "Trumponomics" are the tumor which is making the west die of social cancer.
Reagan and Thatcher were the turning point it would seem.
7
Remember Ireland?
It was a remote economic backwater and the also-ran of Europe with idyllic scenery and charming people.
What about today? Paul Krugman tells us that the business investment in Ireland is "mainly an illusion". He continues: "Companies use accounting tricks to report huge profits and hence big investments in tax havens, but these don’t correspond to anything real."
Well, the European Commission forecast in February that the Irish economy would grow by 4.1% this year, the second highest growth rate in Europe. Unemployment is heading down towards 5% and real wages rose by 3.2% last year while prices increased by only 0.7%.
Amazing how "illusory" business investment can have real effects.
5
GDP includes income earned by foreigners in a country, and it is not adapted to accounting gimmickry. Ireland's national income--true income earned by Irish residents--adjust for accounting gimmickry, pegs the economy as around 1/3 smaller that the official data suggest. Here, read this:
https://www.ft.com/content/dd3a6f1c-6aea-11e7-bfeb-33fe0c5b7eaa
In addition, Ireland's economy is "small" relative to world output, meaning that changes in its tax rates will induce proportionally larger capital flows than for a large economy such as the U.S., making tax policy more effective at attracting foreign investment. (But anyway, Trump's tax cuts weren't meant to result in more U.S.-based assets being owned by foreigners--were they? How do you make America great again by selling your assets to foreigners?)
4
“Why was Trumponomics a Flop?” requires readers to assume that there was some possibility that the Trump economic agenda had or has some possibility of success. Well maybe, because the American economic machine has shown centuries of progress, with a few setbacks along the way, the consensus somehow drifted to the conclusion that, without much effort or thought, a business acumen that is supposedly concentrated in the Republican spirit would produce the critical decisions of economic success.
Oh, my goodness, what could have been an epic in economic development has turned, instead, into a horror show. Instead of building on strengths, that economic modeling has shown to be the key to wealth development, we suddenly became aware that our new economic policy was built on the questionable theory that Trump’s gut feeling and thoughts were a magic lamp. Rub it a few times and genius would spring out. It was more like a backfire. Now stuck in a trade war that is as serious as a pestilence in the farming community and a mammoth pile of debt that will eventually crush economic expansion, the continuation of this economic nonsense is not a course forward.
2
Many don't realize, the amount of unnecessary work and stress Trump causes millions of employees each time he tweets an economic threat or policy.
I have friends in international sourcing, accounting and logistics-- Every tweet prompts a phone call from "upstairs" .. "How will this affect us? -- I need that report and analysis tomorrow morning" --
Oh well, guess, I will be working late tonight... again.
8
If we are looking forward to November of 2020, Krugman's analysis has all the substance and flavor of thin broth. The US has been recovering from a near-depression since 2008. Nearly 100 months of sustained growth started under Obama, continuing and accelerating under Trump. The economy, unless the bottom falls out, will not be a factor in the next elections.
That is far different from the truth that large portions of the workforce are struggling to stay above water which leads to the Democrat's nascent platforms of economic and social justice. Those platforms and policies will require large infusions of cash (taxes) and though popular with many voters, will never be enacted into law without a miracle on election day. That miracle would consist of the Dems winning the presidency and sweeping both chambers of Congress. Like the Loving Spoonful asked a while back, "Do you believe in magic?"
No one with a sound bearing wishes for a deep recession or a depression. The Democrats may well find themselves in an awkward position a year from now. Trumped.
5
Stock market at an all-time high, unemployment at an all-time low- that's not my definition of "a flop." I read with amazement comments wishing for a big Dow drop in hopes it will prevent Trump's re-election. Presumably, those people don't have their retirement savings in the stock market.
5
@Paul McBride - did you read the article? As Krugman predicted, Trump's policies produced a short term growth burst at the cost of a giant and ballooning deficit. As he has written before, other Trump policies that weaken regulation and increase speculation on all fronts makes us much, much more vulnerable in the next retraction. If you're retirement savings are in the stock market, you might want to start thinking about how to protect some of what you've got.
4
The stock market and unemployment numbers were all trending that way when the Trump administration came into office after Obama. They are just a continuation of the of the trend that began during the Obama administration beginning in March 2009. Trump inherited a stable and growing economy thanks to the steady guidance of the Obama administration after taking over from Bush in rhe depths of the 2nd Republican Great Depression.
1
@Paul McBride
About 50 million Americans have a 401K.
There is cynicism and there are hypocritical self-serving policy decisions - tax cuts for the wealthy dressed up in shot-in-the arm-for-the economy togas.
Maybe I missed it in Dr. Krugman's article, but it would seem a key variable in Chairman Powell's rate cut was the political pressure that Trump put on him. Trump - despite his attempts to create a great economy by just saying it's so, over and over again - hasn't got much working for him on the real side.
The Market is good, but the fundamentals are not there. It floats on free money. But Trump and the Republicans have to keep stirring the froth until the election.
We - the Mexicans - are quite concerned about these developments in the States. It does not inspire confidence in a government that affects your economy - whether we like it or not - that is being run by people who advance born-to-fail economic polices, tariffs against all convention wisdom, and denigrate human rights at home on their border and abroad.
6
Trumponomics wasn't a flop. It delivered stupendous results to the people it was actually designed for, the very rich. As for the rest of us, the GOP strategy hasn't changed: lie and spin.
15
It would have been interesting to see Trump inherit the economy Obama inherited. With all his right wing, big corporation, rich people policies we would be living in huts in front of wood fires as our supply of wood dwindled to nothing.
10
The borrow and spend Republicans are well aware that their supply side "economics" is nothing but a giant scam. After all, they are the party of big business--the party of the people who used their tax cut windfall to buy back their own stock, rather than build their businesses. And, after all, it was one of their own who invented the phrase, "Voodoo Economics".
But they cannot win elections on the platform of transferring all the nation's wealth into their own offshore accounts. So they maintain the con, and run on nationalism and by tapping into the racial divide that is still widespread across the country. Hatred toward the "other", toward Democrats and toward coastal, liberal elites still wins elections.
5
Dead on.
Deficit Spending has been a two edge sword since the great depression, it has allowed politicians the ability to go after big ideas when the resources aren't there. This has proven valuable in times of crisis, like the Great Depression and the Great Recession.
Yet when miss used it threatens the very health of our future economy. This point is crucial. We don't feel the pain now but in the future. And here is the subtle difference, Democrats have tried to use deficit spending more or less in a way that builds the future: three "R"s of New Deal, Higher Ed. act of GSP, or the policies of Obama (begun by "W") in 2008.
But Republicans same one trick pony "trickle down" the theory that if you give wealthy people money you make the poor and middle class richer.
So what happens, not only do the poor and middle class not get richer but their children are saddled with paying back the loan. Soon 1/2 of every tax dollar will go to servicing the debt, translation it will take twice as much to run the government as you think, just when serious issues like climate change will be unavoidable.
What we are doing to our children is unforgivable
4
Trumponomics was not designed to achieve any useful purpose like increasing business investment. Trumponomics was designed to transfer even more wealth to the already obscenely wealthy. In that respect it has been a smashing success. His trade policy was designed to give the appearance that Trump is the only person willing to play rough with China on behalf of American workers even as he works against their interests behind the scenes. This is no flop. This is an unmitigated disaster for which we will pay the price for many years.
2
Tax cuts or increases (at least up to about 70%) have little dirct effect on investment, enterprise or productivity. The Laffer Curve was consigned to mythology years ago, except for those who use it to justify tax cuts for the wealthy. Laffer served his purpose, hence the congressional medal of honour, but that was another day that satire died.
2
Trump has his foot on the economic brake with the tariffs. The FED justified the last bit if economic stimulus based on that brake.
Ask yourself this: When the election is in range, will Trump take his foot off the brake, and use the surging economy to get re-elected?
All he has to do to stimulate the economy is take his foot off the (tariff) brake. And he can also just declare a trade breakthru, which also will gain him votes. Since Trump lies, he needs no such breakthru. He just declares that he has a gut feeling, or that he has personally bonded with other leaders.
His campaign then emphasizes the tremendous job (uggh) of fighting against America's enemies and competitors. How some pain was necessary, but now we are winning. Trump won't let the economy dwindle when the election gets nearer.
3
"And since everything is political these days, let me say that pundits who think that Trump will be able to win by touting a strong economy are almost surely wrong. He most likely won’t face a recession (although who knows?), but he definitely hasn’t made the economy great again.
So he’s probably going to have to do what he’s already doing, and clearly wants to do: run on racism instead."
And of course, he will lie about the economy and blame the Fed and probably the Squad for any economic bad news.
3
This is about what I thought would happen. Trickle down economics doesn't work. And now we have enormous debt.
4
The thing is that Trump is the incumbent now. Once you get in, unless the economy tanks, people are reluctant to change. It doesn't have to be booming, it just doesn't have to be busting.
That's why I think policy may actually be secondary in the 2020 election. There are no big wins to be had, or at least not ones that can't be muddled so much that the electoral effect is muted.
Turnout is the winning strategy in this next election.
The Economist had a nice graphic on what if everyone voted. Several easy takeaways.
- Turnout can deliver 20 point swings.
- Turnout always helps the Democrats. Voter suppression always helps the Republicans.
- Big states are in play, like Texas.
I'm from Texas, and so I have 'intel' that the Republicans are very aware and worried about this possibility. So it won't be easy to do, but that's because it's for real stakes.
4
Paul Krugman is essentially correct in his denigration of Republican economic fantasies, but I think he’s missing the point this time. The latest round of McConnell/Trump tax cuts wasn’t meant so much to stimulate the economy, but rather to stimulate campaign contributors.
10
The silver lining is that as Trump’s economic policies takes down the market, he can’t blame interest rates.
3
Yes he can, and he probably will. He’ll blame everyone and everything except his own incompetent self. Thats been his MO his whole life.
What we build from now on; for the population's safety and protection, medical facilities, factories, power supply, roads, railways, water transport and air transport will need to be reviewed in the face of Climate Change and International espionage.
The effects of climate change on all of our technologies will have to be considered. No time to blame or reflect. Now is the time for everyone to step up to the plate and bat for a renewed USA. No where in the US is safe from Climate Change as we have seen this summer - nor is it safe from sabotage.
When is that going to be a priority? Renewing the infrastructure will create jobs, make a brand new America and free the population to pursue their ambitions of usefulness, peace and freedom.
Make America New Again.
3
There is no Republican policy, there is only tax cuts.
The Republicans have been raiding the Treasury for years. Even as the latest report on the status of the deficit indicates it is surging, Ted Cruz wants to initiate another tax cut.
We may as well say: There is no Republican policy, there is only Zuul. Makes as much sense.
4
Trump loves to tout the economy, which is relatively strong right now. However, when you consider the opportunity cost of the current economy, it is a disaster.
With the Obama recovery in full force, we could have used the prosperity to invest in the country. As Krugman points out, we could have rebuilt infrastructure, revolutionized green technology, transitioned to electric vehicles (along with renewable energy structure). With interest rates low and the economy humming, this was the time to do these things. And it would have created good-paying jobs along the way, further spurring the economy and spreading the prosperity around.
Instead, we blew it on tax cuts for the already wealthy. Trump and his GOP enablers blew up the deficit. And for absolutely nothing. A huge portion of this country has been bamboozled into believing that we don't have the money for things that would actually benefit everyone ... infrastructure, healthcare, education, etc. We can't afford them! And yet, trillions of dollars in tax cuts are passed without a thought.
History will not be kind. Future generations will look back at this era with disbelief at how we squandered the opportunity that was handed to us.
5
Why don't tax cuts boost investment? The answer is simple - tax cuts are intended to remedy a shortage of capital, which is assumed to be limiting investment, but there is actually an excess of capital among corporations and in general. Authorities have long talked about a "savings glut". What is holding the economy back is also simple in principle - it is slow growth of demand, and demand comes from the 99%, not the 1%. When wages and salaries for the lower income groups don't grow, neither does demand.
Reducing interest rates is also a supply-side remedy, clearly intended to provide capital at low rates - or even negative rates, as in Europe and Japan. There is no reason to think that tax cuts will boost the economy any more than tax cuts did. What corporations have been doing with the money from both is buy back stock. This increases the value of stocks owned by the wealthy and may increase demand for yachts, but has very little effect on aggregate demand.
Increasing wages and reducing inequality and the bad distribution of money are not simple tasks at all - conservatives have been working for decades at all sorts of measures to increase inequality. Clearly tax increases on the wealthy, not cuts, are needed. But another major step would be to quit relying on central banks to regulate economies - it doesn't work and in practice it increases inequality.
5
Trumponomics certainly isn't the roaring success Trump makes it out to be, but it's certainly no worse than Obamaconomics. Tariffs certainly are working just not super fast because the wholesale prices in China (which is what the tariff is based on) are super low, but if they are left in place long enough businesses leaving China will accelerate, which given their unfriendly actions toward our allies is certainly a plus for the US.
3
Why would tariffs work different or better now than they did in the 1920s/1930s?
3
In 1989, Reagan's economics guru, Martin Feldstein, did not find any evidence that the much vaunted Reagan recovery had come from his administration’s personal income tax cuts (see 1989 NBER paper “Budget Deficits, Tax Incentives and Inflation: A Surprising Lesson From the 1983-1984 Recovery”).
He and co-author Elmendorf found that the recovery which began in 1983 had been caused mainly by an expansionary monetary policy. And, to a much lesser extent, it had come from tax incentives for business fixed investment.
If Conservatives spent more time actually studying and embracing the economic record, especially the record they seem to so fervently worship .. there might be a lot less ignorance standing in the way of economic progress and prosperity for all.
But, that's asking far too much ... instead, dogma rules.
5
stock market is way up
GDP growth, way up
Jobs growth way up
Wages up and will continue to grow in a strong economy
What in the world are you talking about?
7
@Ralphie All those were way up under Obama. The arc of improvement hasn't changed. The question is why Trump's tax cuts and tariffs haven't changed the rate of improvement?
3
@Scott better go back and check the data. There has been a huge acceleration under Trump. Most of Obama's "growth" was the slowest recovery on record from the great recession.
3
@Ralphie Actually, it is you who need to recheck the data. Hint: look elsewhere than Fox News. For example, more jobs were created in Obama's last two years than in Trump's first two years. https://www.forbes.com/sites/chuckjones/2019/07/05/trump-is-falling-almost-1-million-jobs-short-vs-obama/#5316e21b8caa A fair analysis also requires an understanding that the Republican congress that refused to help Obama stimulate the economy due to alleged deficit concerns immediately tossed those concerns out the window to give Trump a two trillion dolla
Since no one tried to answer this I'll try again.
I would like to see Dr. Krugman answer these questions.
I do not see any problem with liquidity in the markets, here or abroad. The Fed rates were already accommodative. So how are rate cuts going to stimulate the markets?
Is it not the case that consumer demand is much less than the available productive capacity which is why the central banks can't create more inflation.
2
If the economy is in a recession, hardly a tax cut will change the minds of the consumers: fear is stronger than a few dollars in your check.
Same thing with the interest rates: a ridiculous of 25 points cut in the interest rate will not make investment projects suddenly very profitable and stimulate more investment; for the simple reason that those projects were prepared "antebellum", that is, before the economic slow down. With demand faltering, there is not "economic snake oil" that works.
As a progressive the current economic situation leaves me with a significant amount of cognitive dissonance. On the one hand, like all middle class people in this country the thought of a recession is a worrying prospect. However, I am also very concerned that progressives will be able to unseat president trump in the upcoming election unless trumponomics fail in a spectacular way and his base is forced to see the numerous errors in his thinking.
Of course, I don't want to see the country plunged into another damaging recession. But if growth is still humming along at about 3%, unemployment stays around 3.9%, and the stock market remains high he will have a worryingly strong set of bad faith arguments to make come election day. It won't matter if rational people see it for the house of cards it really is. His base will just see the headlines and see it as further proof that this nightmare of a president has "owned the libs" once again.
6
It's a reelection policy, not an economic policy.
5
The Dow was 18,000 and declined when Trump was elected. What did Dr Krugman predict in is next opinion?
"Still, I guess people want an answer: If the question is when markets will recover, a first-pass answer is never."
The Dow is at 27,000. All time highs are routinely hit.
Black unemployment at all time lows. Black home ownership rising for the first time since the Bush Admin. A half million more manufacturing jobs back.
I'll take that kind of a flop
4
@Tim Clearly the National Debt is no longer an issue with Republicans. Nor is infrastructure.
Not to mention the negative impacts on individual retirement portfolios every time Trump tweets about tariffs.
4
Employers added jobs at a steady pace in July and unemployment held at a historically low level, signs of an assured labor market despite a broader cooling of economic momentum.
Nonfarm payrolls rose by 164,000 in July, the Labor Department said Friday. The jobless rate last month held steady at 3.7%, near a 50-year low. Wages advanced 3.2% from a year earlier, an improvement from the prior month’s pace.
Overall, the job market is healthy, and the data were broadly in line with expectations. Economists surveyed by The Wall Street Journal had forecast a gain of 165,000 new jobs in July, a 3.6% unemployment rate and 3.1% annual wage growth. WSJ
1
The recent budget agreement between Demcorats and Republicans does nothing to reduce our growing debt. The Demcorats have not criticized how much of the Federal budget is spent on the military, a bloated bureaucracy. This money could be used for domestic spending. Trump, the draft dodger, wraps himself with the flag and the military to increase his popularity. Instead neither party attempts to reign in the cost of health care. The candidates argue over which health plan should be adopted but the cost must be brought down- the cost of drugs, hospital cost and too much expensive and repetetive medical tests.
2
@JAB I agree that health care costs must be brought down but it seems to me that the only way to substantially lower costs is to get the for-profit insurance companies out of the equation.
4
The evidence to support Mr. Krugman’s trenchant points seems irrefutable. Democrats though rarely if ever mention the ballooning deficit or the specific effects to average Americans of Trump’s economic policies. They stood by and allowed the Obama economy to be called “anemic,” never mention Republican’s vote against the TARP bailout that literally saved the economy, or tell a convincing story about the devastating effects of a trade war that has no strategy. Perception is crucial and our side is really weak at shaping that.
19
Krugman writes of the "Republican faith in the magic of tax cuts."
I don't believe for a moment that Republicans have faith that tax cuts increase revenue. That gives them far too much credit for having an actual policy rather than what is more likely true: they knowingly employ tax cuts to starve the federal government into both cutting services and enriching their donor base. For them, it is a win/win.
Don't ever underestimate the cynicism of men like Mitch McConnell and his House counterparts. They don't care if their tax cuts blow a hole in the economy. As long as their donors benefit and they can slash entitlements as a result, they are fine.
1159
@sdcga161 I think you may also be giving Republicans too much credit. Rich people want to pay less in taxes. End of story. Everything else is after the fact rationalization.
37
@sdcga161 Agreed. Republicans like tax cuts because they fulfill two important Republican goals: enriching oneself at any cost, including that of the country as a whole. and hurting other people, particularly poor people and people of color. There is no deeper "economic" philosophy behind it, nor would I expect one, as the GOP is steadfastly anti-intellectual.
98
@sdcga161
I believe that these tax cuts and the corresponding deficits they produce are a way to enrich the wealthy and eventually force cuts in Social Security and Medicare....a Republican strategy.
The labor market depends on the supply and demand of labor. The tax cuts were used for stock buy backs, overseas investment, increased dividends (in some cases) and executive pay. Who thinks that increased profits automatically are forced to got to the worker?
47
Your arguments are logical, Paul Krugman. Unfortunately, I fear they are only half the equation. The other half involves persuasion, and Trump is master of the con.
If there is no major correction or crash prior to next year's election, Trump still stands a good chance of winning. The Dow has gone from 20,000 to 27,000 (a 35% gain) in just two and a half years, and interest rates are very low, so we are certainly at risk.
But what if the economy remains seemingly good, with the stock market at all-time highs and unemployment staying at record lows? I suspect many people will vote for their own self-interests, fearing that a new Democratic president will force a downturn, given that Trump has left us in such a precarious state.
Enough voters may rationalize away our myriad economic problems to maintain the facade that we are seeing sustainable growth. And all Trump needs are enough voters: he won with 46% of the popular vote, and his approval ratings have consistently hovered around 43%.
With no economic downturn, people will be lulled into believing that tariffs on China are a necessary part of the picture, and that the tax cuts will eventually bolster the Treasury and jobs, even though they won't. It's the GOP strategy since Reagan: dangle the carrot, forever. The benefits are always lurking "just over the horizon."
And racism? I'm afraid money will talk, and racism will walk. For too many of us, anyway.
314
@Blue Moon but trump liying 100% contradicted Adam Smith, a society without moral or ética is the beginning of the chaos and destruction of any society.
16
@Blue Moon Let's remember that El Trumpo inherited a pretty strong economy. He did not create this success. In fact, he's trying hard to crash a solid economy he inherited.
56
@Blue Moon--"Us?" You, maybe, but not me. I cannot be bought, and I know a lot of people who feel the same way. We are not greedy, we just want to be able to get along without so much struggle and fear.
26
I don’t know why Krugman thinks that the notion of tax cuts is a zombie idea. Tax cuts actually work very well for the people who are actually represented by Republicans in Congress, namely the very wealthy and large corporate donors. It’s not that Republicans believe in a idea that’s false. Republicans believe in a idea that serves a very narrow group of Americans very well. For the rest of their base? A tweet about AOC should hold them for a couple of days.
784
@M
It's the same zombie notion as "trickle down economics."
35
@M--Tax cuts only work for those individuals and entities that pay federal income taxes.
10
@Alan J. Shaw
The question is not whether "trickle down" works, but rather what is trickling down, and upon whom is it landing, and why do so many of them think it is honey?
For those of a curious nature, the Steele dossier may provide some insight into the appeal - for one man at least.
23
Trumponomics has been very seductive but at its heart it is plagiarism pure and simple. At its heart is the idea that the Laffer curve is somehow scientific. The idea that there is an optimal taxation rate above which productivity is hindered is sold as if taxation rates are independent of history and economic circumstances. Republicans have taken this theory to mean that lowering taxes will always increase productivity and increasing taxes will naturally lower it.
The theory also promises higher tax revenues because increased productivity even if taxed at a lower rate will generate greater collections. And when it doesn't ? Maybe iLafferomics should put to bed . Maybe now as deficits advance we should be on the watch-out for Trump's next shoe to drop, principally the blaming of the deficit...on entitlements.
Trumps playing of the racist card is very much a war on entitlements. His war on Obamacare, public education, immigrants , minorities is about finding scape goats for the growing deficits that he sells as disappearing as soon as they are out of the picture. Republicans have refused to admit the ruinous history of trade wars, economic cycles after expansions and the greed of corporations. Republicans refuse to admit that their pet theory has resulted in 50% of americans having less than 500$ in the bank that can be wiped out by even a trivial illness . Why ? Because the very rich are doing great and the one thing they fear more than death are taxes !
8
@Walter Nieves
"Maybe now as deficits advance we should be on the watch-out for Trump's next shoe to drop, principally the blaming of the deficit...on entitlements."
Bingo! It will happen after the 2020 election, however, since Trump and Republicans know that it would be a poison pill for their electoral prospects. Therefore, we can avoid the attack on Social Security and Medicare by voting Republicans out in 2020.
2
Trump, is not a businessman; he's not an economist. He hugs the flag fiercely but he's not a patriot. He's not a Republican, nor is he a conservative. He's not religious; He knows nothing about what religious conservatives consider 'family values'. (In fairness, I'm not sure what relcons mean by 'family values'!!)
What's left that would instruct us as to what Donald Trump holds dear? I do know he lives in the moment and that he is more than willing to spend the future to prop up that moment.
Perhaps that explains his economic philosophy.
971
@Charles Ross I agree. He has an almost juvenile desire to be liked (by the proper white people), so his economic philosophy would be keenly predicated on their likes/dislikes. These people are happy he cut their taxes, even when he didn't. But when they shop at Walmart and everything is strangely 10% more expensive than it was a few months ago, they won't see that as a tax. I think whatever makes the 'proper white people' happy is where Donald is going to be, and that happiness lives for today, and doesn't consider tomorrow. If he loved these people, he would prepare them for tomorrow, but what he feels isn't love, its more like neediness. I think they are helping him fill a vacuum that was put there by his father.
80
@Charles Ross -- You ask "What's left that would instruct us as to what Donald Trump holds dear? "
Trump only cares about Trump. Trump will lie, say anything, cheat, and do whatever it takes to increase the wealth, power, or adulation afforded to Trump. Everything else is secondary, or worse... Trump, and only Trump is what Trump cares about. Sure, he'll wreck the economy, destroy farmers, and degrade the United States' credibility. But if it makes Trump richer, or fools his "base" for a bit longer, that is -all- that matters to Trump. I vehemently dislike and abhor Trump, because I can see he's lying, and I don't like be continually lied to... Trump is obviously incompetent, and worse he's completely clueless to his inability to govern. If he were a pilot, he would be assuring the passengers that "everything's fine, its all under control" as he flew the plane into the ground. We're all passengers on this US 'airplane', and with Trump as our pilot, guess where the plane is heading...?
107
@Charles Ross, YUP, prop up the moment! During his primary campaign, in an interview with Bob Woodward, Trump said he could pay down the national debt (then $19 trillion) in eight years.
So what has he done? Signed the 2017 $1.5 trillion tax "reform", increased spending, imposed tariffs and is now increasing the deficit to over a trillion dollars per year and the national debt to where it's now north of $22.5 trillion. When reminded that this would burden future generations, the President glibly replied "But I won't be here". Is this anybody's idea of economic leadership and making America great again?
37
Republican voters apparently will believe pretty much anything they are told by the right kind of person (i.e., a white guy). Starting with Ronald Reagan, the average GOP voter has become increasingly untethered from reality. It makes them very difficult to talk to.
I'm serious. I have one Trump supporter where I work. Why he is a Trump supporter is beyond me, as we are both public school teachers and he is my school's union representative, but support Trump he does. In his world, taxes are punishment, there is the worst crisis ever at the border, and Trump's tough trade policies and clever diplomacy have restored the United States to the respect from the rest of the world that it lost after eight years of Obama's apologizing for all the bad things we've done.
I'm just left shaking my head.
16
There hasn't been a surge in employment, older people continue to struggle to find jobs, corporations are not reinvesting the tax cut money back into employee training, more jobs, or anything that will help anything other than themselves. But Americans are always in favor of a tax cut no matter how ill conceived or unfavorable it may be in the long run. We seem to forget that taxes are needed to support the services we want and expect in a civilized country.
The truly disheartening things here are the missed opportunities. Trump claimed that he would give us a new and better health care plan: he hasn't. He was going to provide us with a great infrastructure plan: he reneged on the pretense that Pelosi was saying nasty things about him. He's ignored other issues that ought to be addressed like more funding for basic research, more intelligent regulations on greenhouse gases, better protections for consumers.
We have a president who is very, very fond of himself at the expense of the country. And we have a senate majority leader who is in love with power but not interested in the responsibilities it brings. What has also been missed because of extreme partisanship are opportunities to help all Americans achieve a better life whether they support Trump or not.
Trump ran on racism and won. He proved that the GOP has no ethical concerns unless it's to remain in power. If that means ruining the country so be it.
8/1/2019 8:41pm
1286
"corporations are not reinvesting the tax cut money back into employee training, more jobs, or anything that will help anything other than themselves."
Wages are finally rising and unemployment dropping particular for traditionally disadvantaged groups and women.
Cutting corporate taxes and regulations is a great incentive to growing jobs and wages here. Also, suppressing illegal unskilled labor helps our unskilled citizens and green card holders acquire more jobs and higher wages.
I disagree.
9
@John I think the point is that none of these things have anything to do with Trumps policies.
76
Phooey, jobs won't grow unless consumer demand grows, and wages won't catch up in the absence of strong unions, or a living minimum wage.
238
"Why Was Trumponomics a Flop?"
But it wasn't to Trump who;
Is probably making tons of money from his policies as President indicated by his stern reluctance to divulge his Tax Returns.
Packed the various Executive branch Departments with his people who are dismantling regulations to enable wrong doing and also profiteering from gaining insider information.
Is gaining great fame and name recognition to sell any of his brands by making fools out of everyone parroting his daily rants.
Will likely have lower taxes after he put forth his Tax Cuts legislation.
Will now likely have unlimited financial resources for himself and his family running the businesses.
And who knows where his money is invested and what gains he is making.
3
@SHAKINSPEAR
"But it wasn't to Trump who; Is probably making tons of money from his policies as President indicated by his stern reluctance to divulge his Tax Returns."
While we have not been able to see Trump's tax returns, he does have to file Financial Disclosure Forms each year as President. He reported income of more than $400 Million last year. How does a sitting President make that much money? I'm not talking about his Family business, which he did not divest himself from; I'm talking about Trump himself. I don't even see or hear anyone in the media even asking the question: Where did that money come from? Seem important to me for us to know.
2
Republicans don't continue to put through huge tax cuts for the rich because they genuinely think it will 'trickle down" and help everyone. They do it because they want the money for themselves and their wealthy donors. They want to extract every ounce of flesh from the ordinary people of their own country to make themselves and their corporate masters richer. Similarly, Trump doesn't care if his tariffs hurt farmers and everyone else - he probably does it because it makes him feel good to punish people. These economic policies are not the product of faulty thinking - they are the product of greed, nihilism and aggression.
5
So right after yesterday’s recovery (markets rise 300 points when people calm down above it the rate cuts), he announces more stupid and harmful tariffs and the bottom falls out again. Hmmm, he wouldn’t be shorting the market, would he? Why, that would be unethical!
5
Isn't time to review Trump's tweets that result in huge market movements. Is there any doubts that this most dishonest and corrupt man profited by shorting stocks prior to some tweets, such as Friday 1 August announcement of additional tariffs on China. Millions could be made in Apple stock alone.
3
I think Paul is about 2/3 right. T45 hasn't used the opportunity to improve infrastructure, and he's certainly wastefully dumped yet more bajillions on our most wealthy friends. But on the other hand (the 1/3) T45 hasn't totally derailed the Obama recovery. So we need to be grateful for what we've got, which is saying something in these fraught times.
3
"Why Was Trumponomics a Flop?"
Because it was so well planned and executed by the "very stable genius," just like the way he runs his private companies, chaotically.
C'mon. The man has had 6 business bankruptcies, 4 of those running casinos. Who goes bankrupt running a casino, where based on statistics, you win few cents of every dollar wagered? Only a business incompetent.
6
The infrastructure deal died. Why?
The trade war with China is not real, it’s a ploy to convince his base he’s doing something about mfg jobs. He has no incentive to negotiate with the Chinese since the mfg jobs are never returning. He won’t fess up to this until he’s won a second term and the Chinese probably feel they will be better off waiting to see if he even wins a second term. The tariffs are likely baked in for the next 2 years which will end up harming his base even more. Vietnam does not have an unlimited supply of labor so prices throughout Asia will increase but not enough to move mfg back to America. Trumps a boor.
5
Well put. Brutish Trump's economic proposals are all based on 'thin air', with the proviso that his bragging about the economy he inherited from Obama is classic hypocrisy veiled in 'racism'. Trump is a failed real estate bully, always on the cheat of unsuspecting victims, this time on us, tax payers, por his self enrichment. His legislative 'achievements' have been a disaster even without feeling the full impact as yet. Too bad he has a hold on the 'Fed', that lost some of it's independence to act in an apolitical manner, for our benefit. Tax cuts for the corporate world and ongoing tariffs defy all logic...and decency.
1
Paul, you write, "He most likely won’t face a recession (although who knows?), but he definitely hasn’t made the economy great again."
According to whom? As Stephen Colbert once asked, mocking breathless Fox News hyperbole, "Do you think that George W. Bush is (a) a great President, or (b) the best President?" As long as white people aren't standing in bread lines, the GOP public relations machine will make Trump's economy (b).
And Paul, while a President might not have the power to pilot the economy, he certainly can create short-term shock waves in the markets. I'd like to see Trump's call logs for just before 1pm yesterday along with the trading records of his closest friends and allies. When Trump locks himself in his panic room and tweets about our unfair trading partners, a put option (or millions of them) is a valuable commodity.
When has being wrong or hateful stopped or even slowed down the Republican Party? I'd like to see the Democrats siphon off even one-tenth of that chutzpah.
2
To you that think wages are riding, tell that to my unionized disgruntled ex coworkers at American Airlines. Pension has disappeared and adjusting for inflation they are working for LESS than they were 10 years ago.
Unhappy people that make sure that airplane you’re in is safe to fly. Think about that.
4
This is the same old same old by republicans and their shills. An avalanche of lying verbiage to rationalize and justify the transfer of wealth from the middle and working classes to the rich. They know they’re lying. They know their “economic policies” will never deliver what they tout they will. But what it does do is get everyone talking/writing about how stupid they are. And they’re ok with that because while all the learned colleagues are debating the finer points of economic policy they’re robbing us blind right in front of our eyes and laughing hysterically behind our backs all the way to their offshore banks.
They’re lying. They know they’re lying. Their policies are doing exactly and precisely what they’re intended to do- making them rich beyond their wildest dreams. They’re not stupid. They’re amoral.
2
"Fool me once shame on you, fool me twice shame on me" That should be the Democratic campaign slogan. Falling for Trump's lies the first time, his fault, falling for them a second time, America's fault.
1
I was taking an economics class and the professor was always going on about how stupid/short sighted/wrong trump's policies are. "fly in the face of economic theory and common sense" . When one of trump's picks for the Fed, Stephen Moore, was shot down for being creepy around women, the professor was beside himself "no, no, he should be not be chosen because Moore is a terrible economist and know nothing about monetary policy". trump does him one better: he knows nothing about monetary and fiscal policy.
3
Maybe someday Krugman will focus his critical economic acumen at the Democratic Party's economic blunders, but until then ask yourselves these questions:
Krugman correctly characterizes Republican economic dogma as a cruel joke, so why are all the establishment Democrats, from Pelosi to Schumer to Biden, so eager to reach across the aisle and work together with these Neanderthals?
Here's another question people need to ponder: why, on economic issues, are the Dems always offering compromise positions from the git-go, most recently with their $15 minimum wage proposal - that doesn't go into effect until 2025? A maxim of Negotiations 101 states that you ALWAYS start negotiations with MORE than you want, then bargain down.
3
Trump doesn't have policies, just impulses driven by terminal narcissism and childish anger and rooted in the devious ethics of a crooked outer borough real estate conniver: evade taxes and make someone else pay for your mistakes, reward your "friends", legally or not, attack your enemies and abuse anyone too weak to harm you.
5
Why anyone would take economic opinions from a guy who can't make a gambling casino profitable is beyond me.
As you say, the economy isn't all that bad -- for some people. BUT, there are millions in this country who haven't and never will recover from 2008.
Heaven only knows how many younger people are seriously under-employed in the "gig" economy.
To beat Trump I suggest two things:
(1) Stop responding to Trump's daily baiting on any issue.
(2) Return to the wisdom of the last century's economic guru, James Carville --- "It's the economy, stupid!"
Of course, the tax cut scam did not work and never have since Reagan’s unpaid and W’s unpaid for cuts x2 failed to do anything except increase our national debt. Without specific incentives to increase investment and employee wages it never was going to do the things they lied about. Yet, the democrats are again suckered into accepting the narrative that the economy is doing well because the Dow has recovered from 2018s flop in the last 7months. You call it a “flop” but the democrats are too clueless with messaging to use it to their advantage. Trump called the Obama gradually rising economy a failure until he walked into office 1/20/17 and everything magically was okay /“an economic miracle”with the same or worse job growth and unemployment data and it was all because of him. Biden can best attack this false narrative based on the Obama /Biden 8 yr record, but he is going to need our help not to blow it. We expect Joe to make misstatements and stumble to the nomination but he can beat Trump and that is all that matters!
Trump is a huckster and a con man. He constantly describes things in grandiose terminology, which adds to his lies for the day. He has uneducated, preconceived notions of how things work and uses his assumptions to formulate a semblance of a policy. Example given, is his fantasy economic policy perceptions. He is truly a sad fool, when you think about all the positive things that could have occurred if there was no tax cut passed. That being said, he is still a despicable human being and people are getting tired of his wanna be dictator shtick. The economy. like most things, does not like uncertainty and lack of honest, clear thinking leadership.
2
“And since everything is political these days, let me say that pundits who think that Trump will be able to win by touting a strong economy are almost surely wrong.”
There are a number of reasons why Republicans keep “winning elections.” Poll after poll shows that tax cuts for the wealthy and large corporations, making cuts to Social Security, Medicare, and Medicaid, and other disastrous Republican policies are NOT popular. Republicans are good at using wedge issues, but there is more at play here.
If our elections were "democratic," i.e., if our votes were counted by hand with observers present as other major countries do, many of our election results would have turned out differently. Our State Department uses exit polls to verify elections in other countries. As a result, elections have been overturned in Ukraine, Serbia, Georgia, and Kenya. Exit polls are used to announce election results in other countries before the vote counting is complete because they "fall within the margin of error." Many of our exit polls have not since we moved to computerized voting. In addition, democratic elections require that the vote-counting process is transparent and secure. The opposite of what we have today when our votes are counted by private companies with ties to the far right using proprietary software.
NYT Magazine Cover Story: The Crisis of Election Security by Kim Zetter https://tinyurl.com/yczwsupq
Europe Rejects Digital Voting Machines https://tinyurl.com/yczjwo64
1
"Why Was Trumponomics a Flop?"
Because Trumponomics is nothing but a grand heist by the Trump Wall st Administration from Wall st occupying the treasury to department administrators planted in the various departments to deregulate allowing corporate thievery and gaining insider information, the list just goes on and on.
The tax cuts were a way of allowing Trump's fellow wealthy class to shirk their social financial responsibilities so now not only do they manipulate their tax liabilities with lie abilities, but they get carte blanche services from all manner of governments and public functions for no money out.
It's a grand heist as the billions are now leaving the country as pilfered treasure to be buried on offshore islands by the pirates.
It's all been a sham and a scam. And now we 99% have the total responsibility to finance all government and military functions the wealthy and corporations benefit from without the costs.
It's the Hoods Robin' us.
2
Hopefully, we can throw the bums (Donny and the Republicans) out come the 2020 election.
If not, sad as it might be, it would go to show how many people are uninformed and willing to be swayed by undemocratic, insulting and racist language. Far from making the US great, Trump is destroying it day by day.
The Republicans are taking us back to the Dark Ages with their limp, disgusting behavior. None of their programs are working (we are losing to China and North Korea, we have no infrastructure program, medical costs are as high as ever, we're losing in the 5G and cybersecurity realm - the list goes on and on).
It's time we got back to really strengthening our economy and the safety net for all Americans. What will it take for Republicans to admit that global warming, caused by us, exists ? It's right there in front of our eyes, but you can't see it if you keep your eyes closed.
For our country's sake, let's nominate and then elect a decent President and Congress in 2020, to end the current rot.
1
Just a wild guess, but perhaps a serially Bankrupt, lifelong spectacularly failed “ businessman “, and ersatz “ Billionaire “ is not competent to oversee and direct any economy. If you can actually lose money running a Casino, which is basically a legal license to print Money, you are not qualified to manage a Gas station. If Trump had not been born into a Rich Family, he’d have been in Prison long ago.
Retirement in a Federal Correctional Institution, my dream. For HIM.
4
Though insightful and clear, this analysis will not sway a single Trumper from doubling down on the Trump in the next election. It will not deter any lesser ranking Republican from miming the Trump hisself. You have to give Republicans some sort of prize for consistency in message against all reason. To change one's mind is to admit ever being wrong. In this way, TRUMP is quintessential Republican. Do whatever, no basis in any school of thought or evidence or reason, then double down when it doesn't work with some other wild card. Doesn't matter who.
Trump will run on racism, of course, but he will not ignore bread and butter economic issues. On these he will simply lie, and keep lying. He will repeat, as he did today, that tariffs on Chinese goods are paid by the Chinese and not at all by Americans. He will dismiss contrary sources as fake. He will claim that his imaginary "plan" for health care will insure everyone better and at a lower cost than Obamacare. He will say and repeat that he created millions of manufacturing jobs; that the US is more respected than ever before in the world, and that he has single-handedly ended all threats to national security.
There still has been no counter for a man who will lie about everything, over and over again, and can command the media to report what he says--even if they say "without evidence," or "falsely." What might work is to report lies for what they are, beginning with the headline, "Trump Lies About XXX." Leave the euphemisms for the Supreme Court.
2
Seeing the past tense in this headline brings such joy.
Paul,
As usual, you are the clearest thinking columnist out there. But I'm getting a little tired of the racism thing. Yes, no doubt, he's a racist, but as the election approaches, I believe the other pundits are right. He WILL hammer the good economy message more and more. Nobody, sorry to say, is going to look at your analysis.
Meanwhile, the globe grows ever hotter.
1
Most things are pretty simple. A man who has no significant economic knowledge, and no purported interest in acquiring any. A man who's sole function in life appears to be that of imposing a threatening, mocking, bullying personality on others in order to wring humanity for his own personal gain. That this man has no economic plan isn't really a point worth discussing. It's just to the right of the equals sign in 2+2=
1
Where have all the politicians gone. They think they know all but it's nothing in the sense of life.
People elected this man in the WH for a way out and are finding out that they dug themselves deeper into despair with this liar in the WH.
They will vote for him again because they see no other way and the common sense of being so taken aback by the man in the WH.
When will common sense and empathy prevail?
We all know not in the WH.
Another opportunity missed in the fetish to cut taxes on corporations is the chance to use that money to refinance and reduce interest rates on student loans. I don't support outright forgiveness, but resetting those 6-8% interest rates to the level of the fed funds rate (2%) would go a long way to getting millions of people off the debt treadmill and into having discretionary income to put into the real economy.
PK — is it possible that Trump tips off his friends at Mar-a-Lago about the crazy tweet he plans to send or “announcement” he plans to make knowing the stock market will react predictably to it and they invest accordingly? New tariffs announced, market dips. If I knew that was coming..... would not expect SEC to check the Presidents friends for insider trading under this administration, but it doesn’t mean we can’t be talking about this method among others of continuing to make his friends richer.
2
Trump doesn’t care whether his economic policies are a flop. He and his cronies will profit nonetheless.
Trump’s apparent two-pronged strategy is …
(1) to keep his electoral minority sufficiently riled up to maintain his stranglehold on the system (easy enough once you have terrorized the GOP into goose-stepping with you as you shift the national discourse so far to the right that even historically “Republican” politics can be given the evil moniker of “socialism”), and
(2) to destroy the three pillars of US government from within, aiming for a oligarchical system like in those countries whose leaders he so often praises — Saudia Arabia, Turkey, Russia.
I have yet to see a tweet / policy decision from Trump that did not fit this strategy.
We learned from G. H. W. Bush's time in office that trickle down economics does not work. Trump's economics are Bush's on steroids and you know what, it still doesn't work. Wake up voters, the emperor has no clothes.
1
Imagine... Marianne Williamson has inspired me.
I've decided to live on alternate Earth where President Gore didn't inflate the housing bubble, so the 08 crash didn't happen, Obama got his public option, and President Hillary didn't kill 3,000 citizens in Puerto Rico.
1
I noticed in the sentence "Why build a manufacturing plant when, for all you know, next week a tweet will destroy your market, your supply chain, or both?", you can replace the word "tweet" with "twit" and it still works.
1
The demon hiding in the easy money is inflation. We're told it's less than 2% - but that's not counting housing, education, medication, transportation (except for bus companies run by enterprising immigrants) and, of course, the consumer goods hit by the tarriffs.
The knee-jerk response to inflation is the credit card, hence the national debt and an impending crisis of unmanageable debt on the household level.
Yes, you can bankrupt a nation...just like a casino.
1
The tariffs are working as intended.
US suppliers are shifting the supply chain from China , that strategically challenges the US [1] and Australia [2] to Vietnam [3]
South China Morning Post, June 5th, 2019
"Vietnam biggest winner from first year of the US-China trade war as supply chains shift, report shows
The economy of the southeast Asian nation was boosted by almost 8 per cent due to the shift in production as importers sought to avoid Donald Trump’s tariffs"
This is good news for US consumers, as wages in Vietnam are 1/2 of Chinese wages, so the shift is towards cheaper products.
The shift has been underway for some time. If you analyse the supply chain of HP , HP has shifted production systematically from China to Vietnam for some time , simply because of cheaper (and less demanding) labour. Foxconn, last year, announced to build Iphone in Vietnam [4]
Trump's tariffs merely accelerate what was going on - and US consumers will benefit.
[1] "With Ships and Missiles, China Is Ready to Challenge U.S. Navy in Pacific" NY Times, 2018/08/29/
[2] "Aussie navy pilots hit by Chinese lasers"
Navy Times, May 28, 2019, "Australian navy pilots
hit with lasers during South China Sea Military
Exercise, The Guardian, May 29, 2019
[3] "US-China trade war gives Vietnam a winning
streak, Financial Times, June 22, 2019
[4] "Apple assembler Foxconn considering iPhone factory
in Vietnam" Reuters 12/5/2018
Trumponomics has been a flop, simply because it has mirrored short-sighted, Robber Baron politics.
Instead of curtailing military spending, investing in infrastructure and expanding trade, he has expanded the military budget, ignored infrastructure (except for his stupid wall) and alienated every potential trade partner across the globe.
If there were an Economics101 grade lower than F-,then Trump would be its most deserving candidate.
Is it harder to look ahead and forecast the coming economic environment or look back at Mr. Krugman's columns and see what he might have been wrong about? The answer is obvious.
2
During the crucial 2015 presidential campaign , Paul Krugman, in the NY Times endorsed Trumponomics
Headline
Trump is Right on Economics
https://www.nytimes.com/2015/09/07/opinion/paul-krugman-trump-is-right-on-economics.html
He was the ONLY economists of note to endorse Trump and in doing so helped Trump to be elected.
As Trump could now, correctly claim that his economic policies were endorsed by the most famous US economist
Regrets are too late
2
The whining about Trump never stops, so the column is at least consistent with the authors past bombast regarding the economy under Trump. The Fed has cut by a quarter point, yet this article would declares the economy a “flop”. Growth has been excellent always above 2 percent and close to 3 percent under a Trump despite consistent fed raises over his term! Contrast that with Obama who ran deficits nearly twice as high and had rates cut to near zero. Tariffs, the author reluctantly admit, work to shift demand from the target supplier toward other sources as he gives an example from “China to Vietnam”, well how about a more likely example say “China to The United States” as it is laughable that most supply chain shifts have been simply one Asian nation to another (but even if that were somehow true, they are still serving their purpose to pressure our trading partner China to reform). Look at the Chinese economy, tariffs seem to be working well to pressure their shift in policy with their slowing growth, something Obama never dared to attempt with disastrous results for our economy and intellectual property. One thing the author really gets right is his statement “everything these days is political”, as he wears his politics on his sleeve in this critique of the economy. too bad reason and dispassionate analysis have taken a back seat to his politics in this diatribe masquerading as economic analysis.
4
“...unemployment rate is low and growth remains decent...” and that is a big flop? What measurement are you using?
3
And once again, Dr. Krugman considers Trump's "trade policy" as if the slightest thought were put into anything this "president" does. Dr. Krugman makes the mistake that many others have made, that Trump actually understands the effects of his "trade policy". Or that Trump cares that Americans will continue to suffer under his ill-conceived "trade wars".
The fact is, Trump isn't making any of his decisions to strengthen the United States' hand in international trade. Rather, he is doing it because his base loves to see him stick it to non-whites, be they Chinese, Mexican, or anyone else.
Now, Trump's voters themselves will suffer most, but they really don't care either. It is all about the theater of a white strongman imposing his will. Put simply, Trump voters don't care that his trade policies cost their households additional thousands of dollars a year - all the while putting things like affordable healthcare or higher education entirely out of their reach. Because Trump's voters' interest is race, and only race.
As long as Trump tells them that as whites, they are the only "real" Americans, and they may mistreat others as badly as they like, they will stand in soup lines for this man. Trump voters aren't voting "against their interests". Racism IS their interest. They love Trump's idiotic "trade policies" just as they love seeing Hispanic children in his internment camps. They have a president who is as bigoted as they are. And this is all they have ever wanted.
1
Besides running on racism, a core principle and animating feature of the true conservative Republican movement, Trump will run on bold-faced lies and propaganda. He has the Fox News machine to back him up and lead the charge.
Trump and Moscow Mitch know they don’t represent their voters economic interests but rather their donors economic interests. Thus Paul has it right they have to use something else to gain that vast middle of the economic pie to vote for them and its racism. Any brain scientist will tell you fear is a stronger emotion than love. Trump appeals to our ancient reptilian brain. Sadly throughout history this has worked.
Genius Paul. Send this to Mr Trump and all of his enables and supporters via Twitter, Instagram, Facebook, courier, pigeon, FedEx, UPS, email and the ole fashioned US Postal Service... He blamed Powell yesterday for the intraday stock market loss, but then cheered some crazies on the FOX business hour about abolishing the FED (snapping a photo when the DJIA was up over 200 points) but then his extra 10% slap to China at circa 1:30pm EST today sent the market in a downwards spiral and commodities lost anywhere from 2 to 7%. Insanity and bullying will lead to another challenge for the next President and administration to clean up once he and his cronies are voted out. When will his base realize this?
1
"Republican faith in the magic of tax cuts" = it's good for the donor class, and it keeps the $$ coming. That's all they care about. It never was about the economy.
Failure is trump's middle name. His apparent successes are no more valuable than the gold painted trump letters that he sticks on everything. From economic to foriegn policy, from energy to infrastructure, from executive orders denied by the courts, to his utter lack of legislative skill, trump shambles around claiming success but has failed. It's his life story. How you do anything is how you do everything.
He's made American Debt Great Again. He's made the Ugly American Great Again. He's made Racism Great Again. He's divided the country again.
Time to throw the bums out again.
2
Give him a chance. He hasn't pivoted to presidential yet.
3
The first lesson in human relationships is that actions speak louder than words yet this fact is somehow lost on those who put their faith in the sweet nothings of Saint Ronnie, The Bushes, and Trump&Co rather than double check their wallets. In the meantime Morning in America has turned into Nightmare on Elm Street. If the penny hasn't dropped forty years on...
2
He most likely won’t face a recession (although who knows?), but he definitely hasn’t made the economy great again.
----------------------
Not your economy, but the local economies across the country, Paul Krugman, where people are back working...
You keep up your hopes and prayers for a recession though. It will harm your fellow Americans, but you might just get the Dem win you are hoping for without having to pull off an all out race war.
2
Swamps serve a useful purpose. They clean the waters, provide habitats for myriad animals. They are cool with a mysterious beauty.
Instead of a swamp in Washington we have a cesspool filled with loathsome people with rancid rotten thoughts.
The economic public choice theory of Buchanan needs to be identified as the source of the mess. The 1 percent gets to chose, elect congress and so forth. One dollar equals one vote. The Kochs and the plutocrats are in charge. They fund ALEC, CATO, AEI and the Heritage Foundation. The destruction of collective bargaining and the destruction of unions. Except police unions.
And now the republican deep state hides behind Citizens United. Thank you Political Court Chief Roberts. They own the supreme court and it follows them around like a little trained rat.
They fund the Federalist society which indoctrinates "conservative" judges.
The rest of us feast on the grubs under the rotting logs while the one percent eats Russian caviar with a soup spoon.
Vietnam Vet
2
[Gasp!] Is Krugman here and now suggesting Kleptocracy is poor public policy?
1
US-China goods trade deficit,
Jan-May 2019: $137.1 billion
Jan-May 2018: $152.2 billion
For thirty years, the US-China trade deficit has increased every single year with the exception of 2016 and 2009. The data I quote shows that the US-China trade deficit is on course to fall in 2019. This is happening despite the tendency of a strong US economy to suck in imports. This may finally mark the end of the growth of our trade deficit with China, which has devastated countless American cities as factories closed and jobs vanished. If this comes to pass, it will be a historic success for President Trump.
In the early 1990s, US politicians were seduced by the claims of ivory tower economists like Paul Krugman, who promised that free trade with China would make all Americans richer. Free trade made China rich, but it devastated middle class America as jobs vanished and deficits grew. The failure of free trade is likely a contributing factor to the stagnation of middle class incomes in recent decades. Chinese CO2 emissions have exploded, and their massive emissions are now the greatest driver of global warming.
Dr Krugman even claimed that increasing tariffs would make no difference to the bilateral trade deficit with China. The latest data proves him wrong.
It will take a generation to rebuild American manufacturing, but we are moving in the right direction. Today's tariff increase will help us towards that goal.
https://www.census.gov/foreign-trade/balance/c5700.html
01:12
3
Is this from the same guy who throughout the Obama years kept complaining there wasn't ENOUGH quantitative easing (careful though to never pin himself down with an actual number from which to measure success or failure); and even wrote in one of his rants ... uh, I mean columns during that time, if it was up to him he'd even have the federal government contract out the construction of pyramids to keep goosing the economy upwards?
2
Mr. Krugman’s article supports the awful suspicion that the election will be won, not on facts, but on emotion. By golly, on the Dem side Marianne Williamson might actually have a chance.
I am worried about the other possible long term effects
of the corporate tax cuts . Cutting the corporate tax rate to 21% without getting rid of the corporate loopholes has resulted in 60 Fortune 500 companies paying zero in federal taxes , up from 30 companies the year before .
Additionally , cutting the corporate tax rate in half , 10 and 1/2% , for American companies operating off shore , worries me that more companies will move off shore . I am not an economist . Are my concerns justified ?
2
I generally agree with Prof. Krugman's economic views, but I can't resist pointing out the contradictions in this column. The headline says Trumponomics is a failure, but a few paragraphs in, we are told that in general the economy remains fairly strong. We can say that when the Bush (43) administration did nothing to prevent the housing market bubble or police the subprime mortgage market, its policy failures led to the Great Recession. Like Paul Krugman, l see that corporate tax cuts did not result in very much investment in plants or equipment. Much more went to stock buy backs which increase the value of outstanding shares. Most of the individual income tax cuts went to those in the highest income brackets. In short, if you have a lot of wealth in corporate stocks or earn a lot of income taxed at the highest rate, you benefited greatly from the Trump tax cut. Others got crumbs. The tax cut stimulated the economy some, but spending the money on infrastructure would have had more of a multiplier effect as workers spent their paychecks. It sounds like Prof. Krugman is criticizing the Fed for giving into political pressure from President Trump in cutting interest rates. He seems to gloat that this is a sign that the economy is weaker than Trump would like to admit. However, there is an alternative possibility that would also give Prof. Krugman bragging rights. It's possible the Fed is moving toward his point of view that the recent rate hikes were a mistake.
1
Trump and the Republicans gave the millionaires and billionaires a huge tax cut at a time when the government was already borrowing money by the carload. Now they complain about the federal deficit increasing. They should take some of that tax money and buy a clue. I would also note that my individual tax load increased after the "cut". I can only conclude that more of the tax load is being shifted from the wealthy to those of us with average incomes.
5
@Clark Landrum
This "tax cut" scam has been standard operating procedure for republicans since Reagan. The rich pay less and people who work for a living pay more and yet the 99% keeps falling for it. To most Americans any tax increase means some "undeserving" segment of the population is getting a free ride. Anymore "tax cuts" from the GOP and we'll be living in a third world country.
3
@Kurt Remarque, I agree. I can't afford another Republican tax cut. Our current government resembles that of a banana republic.
I would add that being tough on immigration is keeping our people who will work and pay taxes. At full employment, such a policy limits economic growth.
Another destructive effect of corporate tax cuts is allowing companies to buy back stock that might support or even raise the price of the stock and boost executive compensation without really benefiting a companies longer term profitability. Is that not tru Mr. Krugman?
2
"Instead, they basically used the tax savings to buy back their own stock."
That money went to investors who are, in large part, pension funds especially in state like California whose people pretend to hate these outcomes while benefiting from them.
4
@Daedalus There are an increasing number of people who live in states like California who don't have pensions.
And, there's significant belief, anyway, that using money to pay dividends is a better way than buying back stock.
2
The GOP playbook never changes - tax cuts that only benefit those who use the money to grow their own pockets and not the economy, that increase defense spending, run up the national debit and then leave the whole mess (i.e., Reagan, Bush junior) to the Democrats who are then railed against and vilified for attempting to rein in the national debit and "grow" the economy by, out of necessity and appropriate action, increasing taxes. Trump knows this only too well and does he care? We already know the answer and so does his base, the real one, the 1%. So let Trump, in his lovefest rallies, tell the coal miners, the factory workers without jobs or pensions, the unemployed and underqualified what wonderful things he is doing for them and how they won't be tired of winning... Trump economics, smoke and mirrors. or more pointedly just plain lies. But the sad fact is they believe him and yes, Dr. Krugman, in the final analysis this next election will be about race and not failed economics.
11
@Horseshoe Crab
And when the Dems take back the Whitehouse it will be left to them to solve the economic problems the GOP Whitehouse created. Circles and a circus is all we ever get from so called conservatives who worry about debt and deficits when Dems are in charge. If hypocrisy was a felony, they'd be doing hard time.
1
Krugman is right on the facts as usual-- but the issue in question relates more to have many reducing government and government spending -- even in perception-- fits the GOP value narrative. (Supposed 'takers' vs. 'makers/contributors.').
Fundamentally Trump supporters remain activated by his referencing their value systems in speech if not in deed. Research shows that the presentation of facts is of little benefit in swaying those in thrall to his personality cult.
5
The greatest power that the federal government can wield in our domestic economy is to incentivize job creation and capital investment. That’s where Trump’s Tax Cut & Jobs Act dropped the ball. The corporate tax cuts should have been linked to incentives for domestic job training, job creation, and domestic investment in research, plant & equipment. Instead, the cash bonanza from the tax cuts has been used principally for stock buybacks which CEOs and CFOs can use to increase earnings per share linked to their bonuses. This may be an oversimplification of the issue but it captures the essence of the TCJA and Washington’s political incompetence.
3
Krugman the voice of sobriety and sanity. I wish the candidates would use these points, and make them loudly and strongly.
Are you better off than you were 2 going on 3 years ago? Are WE as a country better off?
2
@Potter Yes to both. Krugman’s dire predictions of economic doom were bunk. Much like the rest of his economic theory.
3
@Registered Repub And were you better off 2 years ago than you were 10 years ago (answer: yes). trump inherited a "beautiful" growing economy, and hasn't managed to kill it (yet).
2
@Potter Trump is better off.
2
Paul, I'm surprised you did not mention the Reaganomics flop while you were at it. Remember the "trickle down" that did not trickle down and added, what was then, a staggering 3 trillion $$ to the national debt ?
I think it's safe to say that the American people spend far more money on self entertainment than on taxes. Are we spoiled or what ?
5
I disagree with Krugman on one point: when he says Trump can’t run on the “great economy.” He certainly can, and will- because the unthinking members of his personality cult will believe him. He could run on the fact he has changed the sky to a beautiful shade of green and his fans would be breathless explaining that they can see a tinge of it.
14
@Arcturus - Look no further than the comment of 'Registered Repub' above...
1
Republican tax cuts are mostly a payback to wealthy donors. They don’t seem to make economic sense. Laffer is laffable.
Bush II slashed taxes on the wealthy. The result was a near depression. And why? The wealthy had oodles of money and no qualified borrowers. We all know the results. Ah, the joys of supply-side. Clueless trust-fund babies really are not very wise to the world.
Focusing on the demand side worked for generations. Providing money to the poor and middle class, through refundable credits or government spending, is money that gets spent. Spent money is real growth and prosperity. That’s why Democrats are actually more successful managers of the economy.
Oh, and that old canard about government being inefficient. Why does the US spend twice as much on healthcare as our country counterparts? Their spending is primarily government-managed. Conservative head scratch.
13
The economy for the election is not defined by the S P, the bond index ratio, the GDP or by unemployment. It comes down to are you better off now than 4 years ago and do you believe you will be even better 4 years from now. It is personal. I think the vast majority of Americans might be doing a little better but are very insecure about their future. Low wages, lack of benefits, high cost of education and child care and no savings let alone a pension make for a pay check to pay check life of tension. Universal health coverage, child care and educational support would go a long way in 2020. Lower cost energy to combat global warming is the message not green new deal. Finally, infrastructure to create a lot of good jobs.
3
Dr. Krugman - please tell us how to get China to stop stealing intellectual property, forcing technology transfers, subsidizing state industries, and in general engaging in unfair trade practices. I don't like tariffs, but what's the alternative?
4
@gbb I don't see any tariffs solving these problems either - but the US consumer is playing thousands of dollars a year for them.
2
@gbb
TPP was a step in the right direction. Building strong alliances is another step in the right direction. But, I believe the most important strategy has to be a win-win strategy. Trump's strategy is you have to lose for us to win. The Chinese are not prepared to lose to Trump.
5
@gbb There is nothing new about intellectual theft on the part of any Asian Company. I have worked for a long time in sophisticated electronics and every time there wa a trade show, Koreans and Japanese, and probably some Chinese, would come in with screw drivers and cameras and start taking our equipment apart and photographing the circuitry. This was happening in the 1960s. I have had to take cameras away from them, open them up and take out the film on more than one occasion. The only difference today is that all of the information that they are looking for is on computer and they can hack into it easy enough. Russia's first nuclear bomb was stolen as were the plans for along to things. It is simply what happens.
The GOP cons have turned the US into a giant LBO, using tax cuts to extract money for themselves, money we've all paid in, for things that should benefit us all like our social security and re-investments in long-term growth like infrastructure. And then watch -- they'll declare those funds bankrupt in due time...just like they've done with pension funds at the company level. The financial sector more than any other has captured our gov. and it should have been stopped long ago, but actually both Dems and the GOP were complicit in that...
9
"Republican faith in the magic of tax cuts"
It's not faith, so much as a false justification. They know tax cuts won't stimulate the economy, but they know that the Trump base is impressed by multi-syllabic words.
8
This must be the tenth (or more) time since 2016 that PK has felt the need to explain the shaky ground upon which Trumponomics rests. As he and most other legitimate economists have long argued, there is no evidence whatsoever that huge tax cuts for corporations have spurred new investment and thus raised growth, new jobs, etc.
He probably will have to devote many future columns to the same subject as the Presidential election cycle unfolds. In that sense, PK is like the cartoon character standing on the street corner, robed and frail, holding a placard that reads, "the end is near." The joke of the cartoon being that absolutely no one is paying attention.
3
We should not count The Donald out. Down through American history there have been many elections won by hate -- specifically racism -- and it is still a potent force. Many of the trump faithful don't know diddly about economics but they do know that The Donald hates the people that they hate.
Many people in the NYT and elsewhere say that the trump supporters don't know what they are doing and that they are always voting against their self interest. I agree that they often vote against their self interest, but they often do know what they are doing. I believe that there are many economically and socially insecure people around and one way that this insecurity manifest itself with through hate -- often racial/cultural/religious antagonism.
For many people the most important issue in their lives is race and when they go to the ballot box on election day race is the first consideration. The Donald matches their expectations on the topic of race, so he is their candidate.
Of course, most people don't go out and say that they support The Donald because his a bigot; they dress it up with something else.
If you don't believe this go back and study politics in the South for the last 150 years. There is a history of southern politicians (democrats and republicans) using race in politics.
Down through Southern political history the standard playbook is to run against the "other." The "other" defined as someone of a different race, religion, culture, etc.
13
Perception of the economy is in the eyes of the beholder. None of us are Prof. Krugman, the Nobel prize winners for economics and our yard stick for measuring Trumponomics is not the same. Average working Americans are better off today than when Trump took office and that will decide whether Trump will be reelected in 2020. To me the Trump administration has been a blessing to those seeking jobs and has been business friendly.
9
For me personally it has been a huge decrease in purchasing power, prices of every day stuff I need to buy have gone up.Many people who utilize my services have no money to pay for it.
3
@girish kotwal, I’m confident you had the same thoughts about incumbent Obama in 2012 when you entered the ballot booth. The economy was quickly recovering from “W’s” economic mess. Oh yea, “but Obama created deficits”. Fact is, Obama turned over a solid economy to a Republican President much like Clinton did to Bush. I have a feeling Trump will leave our country in the same crisis condition as W if re-elected.
3
Average (ahem?) working Americans saw their economic condition improve under Obama, but that didn't stop them from blaming "those people" for their problems, real or imagined. Many of those same people have seen their economic condition worsen under TrumPence, but they still blame "those people." I wonder why.
3
We don't necessarily know why, since economic theory is always in dispute, but we do know from *repeated experience* that supply side tax cuts do not work, (except as a money-grab by the recipients). Less-than-wealthy GOP supporters are meeting the classic definition of insanity by repeatedly falling for it.
46
I suspect he will continue to claim accomplishments without evidence of any. That is his MO and his supporters believe him. Hey, works for them, I guess, because he stokes their inner fears. Maybe if they worked a bit harder and were willing to take jobs immigrants are willing to take, life would be better for them?
21
@Ellen And he’s claiming we’re doing things like never before seen and we’re about to cure AIDS and childhood cancer. He had to use child to really grab them by their gut. The crowd cheered as if they genuinely believed him. It goes far beyond a curiosity when people are that easily and blatantly conned and goes into frightening.
1
Flop? Depends on how you define it.
Think the effort now is to insure crucial components of the economic architecture is within the security architecture of the free world.
1
And then a Democratic candidate will be elected as president and we will hear the GOP revert back to caring about the budget deficit and national debt again. The biggest myth of all time is that Republicans are great at watching the money and managing the economy. Trump is great at one thing, bankruptcy!
82
@Sean you forgot lies and payoffs. Does anyone else recall Trump's promise of a new, beautiful, middle-class tax cut as he campaigned for republicans in the 2018 elections elections? Never mentioned again after the great Republican Senate triumph.
3
@Sean
A search through PK's archives will find a few stories about the fact, Rep. Paul Ryan always was a numbers fraud, not the "numbers guy" his Republican colleagues claimed him to be. After then-Speaker Ryan pulled off the great tax cut fraud, he was caught on a hot mic declaring his hope to dismantle those "entitlements" Republicans have tried to kill for decades. Ending those 'entitlements' will be the tool of the trickle-down acolytes to reduce the debt they created.
Trump’s economic policy is a failure.
His tax cuts are ineffective, exacerbate social and income inequality, and will not lead to increased corporate investments in the American economy.
What has happened instead are ballooning deficits and missed opportunities to invest in infrastructure and create high paying jobs in new industries like renewable energy technologies and electric vehicles.
His Presidency is a moral disaster and his economic policies are ill conceived. Both will harm greatly our future prosperity and our moral and economic leadership in a deeply challenged world. We are wasting the precious little time we have to create policies to deal with the looming existential crisis of climate change and more importantly to lead the world to effectively deal with it.
Trump’s Presidency will historically be viewed as a calamity and as a nefarious combination of amorality and incompetence.
30
It's interesting to see Democrats criticizing Mr. Trump's trade war with China. Everybody agrees that China has been getting away with trade-murder and something needs to be done about it. When Mr. Trump actually does something Democrats, in their eagerness to attack him, just about find themselves taking sides with China! Democrats are not averse to a little anti-Americanism when it comes to bashing Mr. Trump.
6
@Ronald B. Duke
Sometimes doing 'something' makes things considerably worse than doing 'no-thing.' The farmers hurt by market loss in the Central US might have some thoughts on this.
3
@Ronald B. Duke Yeah, well, the problem is that Trump is doing something stupid. I know this makes no difference to Trump sycophants, who worship his every breath.
3
@Ronald B Duke
I’d disagreeing with a president is anti-American I suppose the GOP wins the prize. Moscow Mitch’s blatantly refusing to perform any work whatsoever during Obama’s administration was what? Patriotism? Frankly it was racism, the GOP didn’t like a black man being president. Period. Trump is an utter failure in every respect at home and abroad. The GOP has proven they are puppets clamoring for trumps approval. It’s sad really. Since when does not doing your job get you a paycheck and a hefty retirement package? Only GOP legislators fit that definition.
3
We just watched Trump at a rally in Ohio.
He promised lower prescription drugs like Canada
has.
Better healthcare than Obama care, with more coverage.
Vets can get care any place.
Cities will be cleaned up using money that Dems would spend on illegal immigrants.
A wall protecting this country.
The economy looks good.
Is there anyone running that could beat him?
I am worried.
1
He is in position to deliver all of these things, if he ready wanted to. The House would work with him on all of that and the Senate is his. Why believe what he says when there is no actual delivery on these promises? The smart Democratic nominee will play those clips from those rallies and ask, "where's the beef?"
8
@s.whether
Nobody the democrats could nominate would possibly be able to keep up with all of Donnie's lies.
That... seems to be a good thing, actually. Doesn't it?
@s.whether Why hasn't he already done so?
I just got back into town after two weeks in the woods near a lake here on the western slopes of the cascades.
The National Forest was infested (infested, I tell you!) with mice (traps in my RV were snapping at all hours until I figured out how they were getting in), the trees were infested with the Hemlock looper inchworms (millions in the trees near my campsite), and hundreds of white men towing $50 and $60 thousand dollar small boats to catch too few fish.
The local PUD raises fish and drops them into the lake by the thousand but there's too many white guys out there chasing them so all they catch are a four or five small ones.
But I bet their beer was cold and they really just want to show off their new bass boats. It's all about status. Who cares if the Forests burn up from Climate Heating anyway? They can drive to another lake, right?
18
Of course Trumponomics is a flop, with huge budget deficits incurred primarily for purposes of wealth transfer to the already wealthy among us. In addition to wasted opportunities for infrastructure investment, future policy makers will be severely constrained in their options for dealing with inevitable economic disturbances.
But here's the thing: You won't find anyone among the chanting masses at the vapid Trump campaign rallies who will face even that simple, inconvenient fact. Trump's "base", like Trump himself, are not tethered to reality. Indeed, they seem to have no use for it.
11
Dr. Krugman, I am a Republican. Very few Republicans, except perhaps a handful who learned their economics from Reader's Digest, believe tax cuts spur investment and create jobs. Tax cuts leave more money in the hands of the wealthy to use as they please, whether bidding up the prices of fine art, buying condos overlooking Central Park, or buying more shares of stock X. Republicans know future tax cuts require that we all lie about the meaning of the most recent tax cut. But if Betsy DeVos owns 9 yachts do you really think she is going to invest in a 10th? NEVER, ever believe a Republican who promises growth as a consequence of tax cuts. You want higher employment? Tax the wealthy and put the revenue to work replacing bridges and building housing for low-income seniors. If for whatever reason I think I need a million dollars I will work to get a million dollars, and if my marginal tax rate is 90 percent I will work longer, harder, or smarter than I will if my marginal rate is 20 percent. Few Republicans will admit tax cuts to stimulate the economy are a fraud perpetuated by people like Paul Ryan who knew full well it was all smoke and mirrors. But it was and is a fraud. Point out to every American how much more we owe individually, how much more we will pay in income taxes, how much more we pay in trade taxes (a.k.a. tarriffs), and how much we need to pay in remediation for fouled water and air, to make it clear tax policy is not inadequate but a fraud on American taxpayers.
75
@usa999. Agree completely.I would add one thing.The very wealthy are not using their money just to buy more things.They are using it to donate (Citizens United) large sums of cash to Senators and House members to entice them to support and vote for bills that perpetuate and worsen the problem.A small investment that ensures even more profit and control of the economic life of the rest of the country .
16
@usa999 For this to be true of "most Republicans", either the number of registered Republicans would have to be vastly reduced, or we would have to admit that most Republicans are colossal suckers. The former would be ok with me, but I'm afraid we are saddled with the latter.
1
"Nevertheless, Republicans persist" - indeed.
The Republican President's "economic policy" is a flop because it's just another rehash of zombie trickle-downism, which GOP'ers sprinkled with their traditional 'tax cuts pay for themselves' magic fairy dust, trying to prop up the Grand Chimera which is their essential raison d'etre.
The GOP'er grift becomes impossible to hide when the Republican President is a chaos adherent.
8
@Phil: Yes, let's get rid of fire departments, police departments, and the country's shared defense./s
Even the NFL is a socialist organization.
1
Trump did declare bankruptcy six times in his private life. More people should have paid attention to the fiasco of Trump's businesses before they voted. Trump vodka anybody?
17
@Linda How anyone could fail at a casino in Atlantic city is a mystery to me.
1
Trump just gave the Medal of Freedom to Arthur Laffer, the father of Reagan's trickle-down economics, a theory that time and data has completely discredited. When he pitched his 2017 tax cuts, he cited Laffer's bogus nonsense as his justification.
Trump's other favorite economist is Peter Navarro, the prominent tariff proponent and former Fox News commentator who serves as Assistant to the President and Director of Trade and Manufacturing Policy. This is the economics brain behind Trump's weaponizing of tariffs.
Another frequent White House visitor, Kim Kardashian, has shown more economics expertise than either of these two.
L
17
"Nevertheless, Republicans persisted."
Good one, Paul.
Fortunately, President-to-be Warren is even more persistent.
8
Ryan took advantage of Trump’s ignorance to push his tax cuts for the wealthy and corporations. But, in Trump’s case, the buck doesn’t stop on Trump’s desk, it stops on Powell’s desk. As per tariffs on China, Trump doing the right thing. Both Democrats and Republicans failed in the past to stop the trade malpractice by China. The only thing is Trump should have rallied our friends to go with us.
3
super big "only thing." We'll most likely end up with a no improvement on trade, ruined trust & no world partners. By contrast previous Presidents have made at least incremental improvements
The next recession is already baked in due to excessive debt at all levels. We are waiting for the trigger. It is likely to be a combination of Trump's insane tariff brinkmanship combined with a hard Brexit (symbolic in depth of impact due to Great Britain's small size, but huge in terms of the governance crisis in the West) and a major economic disruption in China. Asset holders, look out below. You are about to lose 30-40% of your wealth.
4
The seesawing economic declarations and ideas of this president are foreseeing a dark future for America if he will be re-elected.
Goodbye Social Security, Medicare , Medicaid ,human rights , education , ACA , planned infrastructures , etc
7
Lost opportunities indeed. Can anyone point to even one signature domestic policy decision that has been made by the current administration or its minions, just one that benefits of average America? Even one?
All that money given back. And almost all of it has gone into the pockets of the privileged. Which, I suppose, was the entire mission statement of the (former) Republican Party and its benefactors.
While they continue to prance and waltz their way to the bank in almost conga line fashion they are bankrupting the rest of us. The tragedy is we've allowed it to date.
So it goes.
John~
American Net'Zen
11
When will voters ever learn that the Republicans do not understand how the economy works.
8
I like the part where Krugman ignores that Trump is fighting a Fed tightening cycle (rates and quantitative tightening) while ignoring Obama got zero % rates, three rounds of quantitative easing and $10 trillion of deficit spending. The "Obama" economy was anemic, and a debt fueled, zero interest rate fiction. Is it true Krugman was once an economist before he became an expert on race relations?
4
@TL I guess you slept through the period of 2008-2010 where the Dems inherited a huge recession and an unfunded war started by GW Bush? The zero interest rates were the gift to bail out the banks, and the government from the stupidity of the Bush era. Obama raised taxes, but we got the ACA out of it (I was one of the people who got the big bump on my tax bill, but i thought it a fair price to pay for expansion of a needed service). what has the GOP done for me? small tax change versus 2016 and soaring debt for the future. The next time the Dems are in they will have to raise my taxes again. After so many cycles of this, I am prepared. I just hate that we are destroying the planet and the environment here along the way this time
1
@TL You describe the Bush economy that Obama was forced to rescue. Now Trump is riding the coattails of the Obama economy. Bankruptcy is sure to follow if his history is any guide.
2
@TL I guess u forget the DOW was sub 10k. Obama left Trump with a DOW +20k. I like growth but anemic might be the wrong word.
1
Thank you again, Professor Krugman, for the wonderful article.
3
As much as I hate to say it, there are a number of reasons that Trump will luck out again and get an economy that may not be great, but will be good enough where it counts in 2020. First, for as much as Republicans hate the census, it will be a fantastic Federal jobs program leading up to the election. Second, the upcoming billions in campaign spending will be focused on the battleground states. Third, instead of using the debt ceiling to curb Trump’s fiscal irresponsibility, Democrats stupidly gave him an early Christmas present by caving on the debt ceiling and increasing the deficit by $320 billion. And if that is not enough to tip the economy in Trump’s favor, he has a compliant Fed that is already bailing out the insanity of Trumpanomics even though the employment numbers are the best half a century. Amazing that the groups that Trump criticizes the most are doing more for his reelection that Trump himself is doing.
1
Trumponomics works to increase income and wealth inequality. The unfunded Trump tax cuts, were skewed to mega rich folks like Trump. No concern about the budget deficit, or how struggling Americans would be comfortable seeing most of the tax cuts, going to those who need it least.
Those who miss out on the tax cut bonanza, continue on their minimum wage jobs, that see them stuck in a cycle of working longer and harder, but not getting ahead. How could they keep voting for Trump, who has been strong on the spin, but weak on delivering for those in need?
Vote Bernie/Liz
I would rather be promised the moon and then given some shiny stars, than have a President that promises little and gives even less. Status Quo with Biden.
Sanders and Warren have dreams for a prosperous future for all, Americans need to have hope.
If only they keep the old rules for immigrants and take care of American citizens.
Yang for Sec of Treasury
3
I've noticed that Trump economic apologists argue that nothing about the current U.S. economy looks or feels like a "flop," as PK claims. They point to a prospering Wall Street, robust growth and low unemployment as the main indicators. These all seem to be very compelling and persuasive arguments that Private Bone Spur is doing a great job. I'd like to play the Devil's moderator and ask some of you to argue, with a logical argument, why Americans should believe otherwise.
3
@mrfreeze6
Wages. Wages haven't risen enough to be noticeable to those of us who live paycheck to paycheck. It still takes two or three jobs to scrape by. Low unemployment has not led to employers "competing" for workers by raising wages. So, for the vast majority of Americans, there's been no improvement in the one thing that affects their lives the most -- their income. The economy sure feels like a flop to me; there are millions of us out here who still remember what it feels like to have a decent job with decent wages and benefits. We don't have that now. Nor will we ever if Republicans have their way. There's only one thing they love more than low or no taxes for the rich and that's even lower wages for the rest of us.
29
@mrfreeze6
Here is the stock market for the last 10 years:
https://www.macrotrends.net/1358/dow-jones-industrial-average-last-10-years
Here is the unemployment rate since 1990. Note the last ten years.
You can see that the trend line for both indices for the last 10 years is a straight line. Trump hasn't done anything but not mess up the economy he inherited.
1
I see Iowa is shutting down ethanol plants to help met Trumps lower mileage standards. All the winning.
So much for "promoting jobs of the future."
2
Ethanol is a scam . Get rid of it .
More importantly, why was Trump allowed to continue tweeting from his personal Twitter account after he was elected President? Surely most people moving into the White House understand their personal life is over for the duration. Could there be an opportunity to discuss a constitutional amendment or two?
8
We've had long, long expansion since the near death knell of 2008. Quite simply, the cycle has run out under Trump.
He took credit for the boom. He can take blame for the bust.
One year from now, all the quibbling about moderate versus progressive Democrats may be moot, because Trumponomics will be in the tank.
And with the Fed unable to cut interest rates lower or do more quantitative easing, the next recession could very well be worse than the Great Recession. Then you will see Moscow Mitch and other Republicans flee Trump like rats off a sinking ship.
Now is not the time for a trade war. Now is not the time for name-calling directed at Congress That's an opportunity cost to getting things done. As is withholding the cheap labor supply for agriculture and hotels in concentration camps at the border.
The sad truth is, a significant part of the GDP runs on undocumented workers. They do not come for handouts, they come to work - and under the radar of government at that. Even the Chamber of Commerce that supports them, like any capitalist entity with an eye on cutting costs.
Now is not the time to curtail SNAP food stamps, a utilitarian way of pumping money through agriculture and consumer products in economic hard times.
Mueller did not get Trump (according to most).
However, karma will be cruel to him. As will his misguided policies.
10
As the interest on the national debt becomes unservicable , SNAP will be the first of the entitlements to go . We'll be back to measuring THE MISERY INDEX .
Presidents, in economic matters, don’t have much impact, as you wrote. Even the so called national economies do not matter that much. The rate of profit gets equalized at the global level though competition among the transnational corporations. The global profits created by international labor gets divided by the owners of international capital. Tariffs, tax heavens, and in general everything related to the flow of capital (for which national barriers are no longer much of a problem) creates illusions as you wisely mentioned.
What I disagree is with calling this “pretty strong” economy when the production of China is slowing down and the negative interest rates in Japan and Europe. You also correctly contradicted yourself by admitting the slowing down here since the beginning of the year. In addition, inequality goes on abetted my more mergers and consolidation ( take a look at the healthcare industry- it is a business after all)
4
The first idea was to repatriate American owned foreign manufacturing. When that didn't work, Ryan talked up instituting "Duties". The public quickly identified that as Taxes on all consumers, outrage followed, and the idea faded. A year later, Trump renamed the old Duties idea; Tariffs, which we all quickly knew was a deceptive repackaging of the old Duties. Trump slowly presented tariffs and then started proclaiming his "Trade Wars" as a means of beautifying the idea of Tariffs as a weapon, and still does to this day.
But here's the catch; The duties came before the tax cuts giveaway leading me to believe the Duties idea was intended to prepay the coming tax cuts that were eventually passed. Just before Christmas in December 2017 when the Tax Cuts bill was signed by Trump he falsely presented the bill as a "Christmas Present to everyone".
Shortly after that came the resurrected Duties renamed Tariffs likely intended to offset the deep deficit increase from the Tax Cuts legislation. Low and behold, tariffs taxes on consumers are roughly equal to the tax cuts deficit.
Just this week, as the economy slid a little, the fed rate reduction was initiated. The stock market swooned, and I surmise that the money withdrawn may be going into T-bills, and thus, the treasury to further offset the deficit.
And still, manufacturing is not returning.
Trumponomics is chaosonomics practiced every day without strategic direction. It's failing day by day.
23
The GOP invokes and embodies Lincoln's phrase about fooling some of the people, all of the time, every time they trot out their
supply side economics canard (For more honesty, I prefer the "Horse and Sparrows" moniker).
As regards the Fed's latest cut, I have been having cognitive dissonance over a rate cut with record unemployment and a strong economy. The fact that the cut was rationalized as necessary as a result of Trump's unilateral actions, was rich in irony.
3
Although, thankfully the nearest Trump cheerleaders to me here in France are probably Marine LePen and Boris Johnson across the channel, my sister lives in a small southern US city with plenty. Despite many hanging on by the skin of their teeth, with stagnant wages, insufficient healthcare for e.g. much needed-knee operations and dental work not to mention cancer care, no disposable income for their homes, little available cash to help their kids go on to college, and no vacations further than their living rooms, they think Trump is doing a great job and are sure that economic prosperity is just around the corner, if only Democrats would stop thwarting Trump’s MAGA plan. Thanks to their viewing and listening habits, they are also blissfully unaware that Moscow Mitch and the GOP are gunning for their Social Security if Trump is re-elected.
I sometimes struggle with understanding the “wonkish” parts of Dr.Krugman’s analyses of global and domestic economic forces, but to paraphrase Bob Dylan -
“you don’t need an Economist, to know which way the wind blows.”
25
I’d like Krugman to examine infrastructure spending here in Sweden and contrast it with infrastructure spending in the U.S, under Trump.
I’m visiting Sweden and I’ve been blown away by massive infrastructure projects, both public and private, everywhere I’ve been. Roads, rail, waterfront developments, housing, utilities, etc.
How is it that the U.S. can’t get any infrastructure projects out of Congress and the Swedes seem to be going gangbusters?
33
@Richard
Another topic for Paul's "to do" list:
Please comment on the negative impact of employer
based private medical insurance. Does it reduce labour mobility?
7
@Richard
Firstly Sweden's prime is negative .25%. Do you want to lend money or borrow money to do infrastructure ? What is your return on investment when you borrow money to build infrastructure at negative interest rates. In our real world sometimes long time dogma must give way to a surreal reality. What is the value of capital when everyone wants to borrow and nobody wants to lend and of course those that need to borrow can't get it at prime.
I can't think of anything better for America's economy than massive flooding and raging fires and spending its way into prosperity.Sweden has of course had a negative prime for half a decade and balances negative interest with an orderly slightly less liberal market than the USA because Sweden is pragmatic rather than ideological.
Everyone knows an all you can eat buffet is unrewarding physically, aesthetically or psychologically but the joy and freedom to eat as much as you can surely captures the ethos. I say bring back the feathers and the vomitorium and make America really great again.
2
@Richard Because Sweden.
"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."
I doubt that most Republicans have any faith in the economics of tax cuts. They may not even care. I do suspect that they do have faith in the politics of tax cuts. Tax cuts sound good to the working middle class, and are good for the political donor class. The magic of tax cuts don't eat zombie G.O.P. brains. So far the tax cuts are working the magic that they were intended for: Corporate profits and political power.
22
@Alix: Exactly. They have faith in the rhetoric of tax cuts, and mostly they have faith in the tax cut part of tax cuts. They get to keep more money! Makes the world go around!
5
How to prevent economic disasters that are generated by the extremist policies of the partisan politicians and their equally partisan economic advisors?
2
"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 ... was a failure." Further, the Republican-dominated Kansas legislatures overrode Brownback's veto of a tax-hike bill, relieving KS's fiscal woes.
A good argument against tax-cuts especially when the economy is not in recession. The 2012 ballot initiated tax-hike in CA, mostly on the wealthy to up to 13.3% benefited CA greatly. The top rate in MO is only 5.4%. But most Missourians pay at a higher rate.
In MO the top rate is on all incomes over $8,424 in 2017 but in CA, a 6% rate kicks in only after $63,938; below that the rates are less; up to $40,510, the rate is only just 2%!
If we have higher marginal rates, say 40% on over $1 million, 45% on >$5M & 50% on >$10M, all on taxable incomes, it would hardly be burdensome for any. True, the richest would pay a bit more, but 99.5% would pay at about the current rates. But it can substantially reduce the deficits of nearly $1trillion & rising.
To help the working poor, payroll tax ought to be cut on first $10K to 1% & to 2% on the second $10K. Lift the cap but again cut to 1% beyond say around $300K, which will lengthen social security solvency.
15
@A.G.
The difference in taxation between wage & investment incomes should end for incomes over $1 million.
I think the wealth tax could be less than that in Elizabeth Warren's plan, say, 1% on over $100 million & 2% on over $2 billion. The inheritance tax could be phased out, which would be a selling point.
One argument against inheritance tax was many small businesses & farmers had to sell their assets when they inherited them to come up with the tax money, hence called the "death tax."
There are other untapped resources to be taxed, like a financial transactions tax, which will strengthen investment-sentiments, as opposed to computer programmed back & forth trading in lightning speed, which has no social value. The volatility will be drastically reduced providing confidence for longterm investors.
7
I would have to disagree, the lead times at the factories in China are down sharply, the first time in years. As the big manufacturers move supply chains elsewhere it allows the smaller ones to move in an occupy that space, it’s called survival
Americans still refuse to pay full price for consumer goods.it began with Wal-Mart and big retail going public, taping into unlimited capital to aggressive buy market share
Now it’s Amazon. Krugman has no idea
@hawk Your letter is not clear. Where is your disagreement with Krugman? You think tax cuts have increased investment? You think tariffs have helped the economy? Did you understand his column?
3
@hawk
What you are complaining about has a name: COMPETITION.
Conservatives have told us for years that competition is a good thing.
Adam Smith said the same thing.
I don't see how people can complain about Trumponomics. He slashed taxes on the ultra-wealthy and greatly increased them on everyone, which is just what a good Republican should do.
(Warren or Sanders, please. We don't need another Republican who calls himself or herself a Democrat.)
5
I hope Paul Krugman will discuss in a future column (or email newsletter) why he believes it's unlikely the economy will face a recession in the next 15 months. Isn't one long overdue (at least a significant downturn) and aren't there blinking red lights indicating a major downturn is in fact on the way? I know predicting one is a mug's game but I'm curious as to why Krugman thinks it likely one WON'T be coming within the next year.
3
@Michael Well, we may well be in a recession now (measured by 2 consecutive quarters negative real growth).
First, the population is growing about .8%. Subtracting that from the 2% nominal forecasted 2019 GDP growth, that's 1.2%.
Further, if you believe BEA's GDP deflator of 5% inflation since 2012, then fine; I don't trust their numbers for a host of empirical reasonse.
Finally, do components of quantity GDP accurately/reliably measure true economic growth? Especially over time?
The upshot: Relying on "Real GDP" as an absolute measure is VERY tenuous... MAYBE it has SOME use as a directional indicator over time...
"Why Was Trumponomics a Flop?"
"The answer is that both the tax cuts and the trade war were based on false views about how the world works."
The history of the U.S. and the World supports your thesis and the false view of the President and his G.O.P. are doing harm to the U.S. and the welfare of humankind.
The record shows that the U.S. has failed to invest in its human capital in vital areas of health and education.
Clearly, the Trump Administration has been in total denial of the realities of global warming and has not used the talent and equipment in its laboratories to research and develop technologies to better adapt the economies of modern world to non-fossil energy.
Instead we are are trying to rerun past national successes by investing in a repeat of the landing a man (woman) on the moon. Meanwhile China is developing space based solar power systems.
China, Japan, Korea, and India are investing in magnetic levitation transport systems which are inherently much more efficient because this no-emissions system doesn't use rolling friction to propel the transport vehicles at 300 mph.
Incredibly, the system that Japan proposes to build in the U.S. was invented by two Brookhaven National Lab scientists, Drs. James Powell and Gordon Danby. www.magneticglide.com
Powell and Danby's technology can also launch solar cell arrays to orbit for less than 1% of rocket cost to beam energy to any spot on Earth with the potential of providing cheap electricity to the World.
7
@james jordan
I watched our the Democratic Presidential Candidates in the two "debates" and reading your column so soon after the last debate and it prompts me to suggest that Dems would be wise to read this column and focus more on the "future issues" as they see it based on solid analysis of geographic and demographic data.
For example: in the rural Midwest, there is a pronounced higher proportion of aging people who are dependent in large measure on social security insurance payments. https://www.nytimes.com/2019/07/31/opinion/trump-2020-midwest.html
The GOP strongly opposed Social Security or even though conditions were very sad before social security was enacted by Dems and how long the issue was in national debates before the Great Depression gave FDR a shot at successfully introducing Social Security.
Democratic Candidates should talk about Social Security and why it is the one good reason to NOT vote for any G.O.P. candidate. Their opposition to the Social Security Insurance Program was early proof that they harbored a false view of how the World works.
During the Clinton-Sanders debate in the last election, Sanders called for the elimination of the cap on social security payroll deductions, which are unfair, and use that money to raise the pay to retired people. It would help reduce the "income gap" and make the trust fund stay solvent longer.
Furthermore, I think this could win Iowa, Wisconsin, Michigan and other demographically aging population States.
15
@james Jordan Very good point. I start yelling at my TV whenever the pundits start talking about "necessary reforms of Medicare and Social Security." Medicare does need some work (maybe Medicare-for-All would lead to better coverage and lower prices), but Social Security just needs its cap raised. It's not a government tax, even though politicians like to think of it that way.
11
I'm sure Mitch McConnell and the rest of the GOP leadership will come to the enlightened conclusion that the government is running a huge deficit (thanks to the 2018 tax cuts), and propose cutting Social Security, Medicare, and other entitlement program benefits to balance the budget.
38
The reason Trumponmics IS a flop is that it doesn't rely on any tested theory, model or experience, even if we take the notion of theory to suggest a weak hunch. Trump's ideas are not even badly though out--they are not thought out at all. And his advisors and like-minded legislators don't provide any substance nor structure in the matter
Trumponomics is simply provocative guess work: it's all about the dirty tricks section of Getting To Yes, and abandoning the main ideas on principled negotiation. It is a reckless abandonment of rigor, except as an experiment in applied power and propaganda.
This experiment in taxes and tariffs will not simply prove a failure, but may drag our country down for years.
8
"Republican faith in the magic of tax cuts — and, correspondingly, belief that tax increases will doom the economy — is the ultimate policy zombie"
It's not a zombie. They have to give some palatable reason why their gifts to their big donors are "good", but that doesn't mean they really believe it.
6
Trump is right about confronting China. It’s better to shift production to Vietnam, Mexico, ... whose ambitions are not world domination, controlling rare mineral mines, stealing technology, ... and who are by and large honest brokers in negotiations.
So many analyses these days are short term and superficial, or just colored by Trump hatred.
And last time I checked the US economy is still doing much better than e.g. Germany’s nearing the end of the record up-cycle.
Let’s look at issues objectively.
1
@Anne
I think you are right about China but Trump, as he does with everything, believes the only way of reaching an agreement is to demean, strong-arm, and bully. His tactics are not only unnecessary but create so much ill-will as to make any agreement unlikely. Only a man with an out of control ego would try to bully China and think he could win. China will just wait him out and hope he is not re-elected.
IMO, Trump has earned all the hatred going his way. Example: Trump calls one of the finest newspapers in the world, "The Enemy of the People?" Yes, there is hatred, and all of it is earned.
As for our economy doing better than Germany's, I also respectfully disagree. We are like the family who lives down the street. They buy new cars, go on expensive vacations, wear snappy clothes but one year later declare bankruptcy because it turns out they were living off their refinance proceeds and not their income. Sure, we are doing better than Germany but have done it on the backs of our children will be forced to repay our huge deficits.
9
@Anne
Look at issues objectively? Did you do that with Obama? Trump is piggybacking on the Obama economy. Did you praise the Obama economy, as unemployment fell and jobs increased? (Even with the Republican Congress blocking action by pretending to care about deficit spending.) And there is no consistent Trump policy with regard to trade, other than trying to look tough to please his supporters.
3
@Anne
Even if we shoot ourselves in both feet?
1
This article, incisive as it is, seems to tacitly accept the premise that Republican economic policies are meant to foster a healthy, stable economy. In fact, they are intended to enable corporate crime, tax evasion, and oligopolistic rent-seeking and to quietly smother any public effort to nurture a system of shared prosperity.
Of course the tax cuts didn't spur productive investment. That was never really the point.
39
"There was never any reason to believe that cutting corporate taxes here would lead to a surge in capital spending and jobs, and sure enough, it didn’t."
I am no economist (but that is a strength in the Hump era, in fact, the real strength is ignorance) but I can see a Hump style response. They will say given the low unemployment rate and the fact that many workers are not prepared or matched to the job market how can there be major job surge? I know that doesn't answer the real question but it is a good spin.
As to doing "policies promoting jobs of the future in things like renewable energy", come now, Dr. Krugman, he was selected (by Putin) and thinks he won by promising coal revival and is in the pocket of oil money. So how can he do that?
5
Growth purchased by debt has very unpleasant consequences as we shall see.
4
There are two incidental bits of wisdom in this article (actually one bit of wisdom stated twice) which I wish all Americans would repeat aloud twenty times every morning when they get up:
"Business investment depends on many factors, with tax rates way down the list."
AND
"Except in times of crisis, presidents matter much less for the economy than most people think,..."
RIGHT!!!!
Presidents, and law-makers, and the board of the Fed, are like a captain of a sailing ship, or like a caretaker of a windmill. They decide how big to make the sails, and what shape, and when to furl or unfurl the sails, but they cannot control the strength or direction of the wind, and the wind matters more than the sails. Economies are determined mostly by forces beyond a politician's control: big, international factors and changes in technology. So long as a president avoids any catastrophic blunder, it's much more important for him to be lucky than good.
9
@HandsomeMrToad Comparing the economy to "forces beyond a politician's control" to the "strength and direction of the wind" is an incredibly good, almost perfect analogy, in and age when most pundits and memes don't know the difference between a good and bad analogy. This one, I really think, is right on.
Can we please put this to bed? Tax cuts for the rich have never and will never stimulate the economy for the average American. It does stimulate the financial and legal system to support the excess wealth for the rich, and stimulates spending on lobbyists to keep the welfare for the rich spigot open.
41
@Tom Yo, Tom. I know what you mean, but you gotta keep bringing it up to those that don't get it as you and I do. Keep the faith, bro!
@Forrest Pommerenke
"Bringing it up to those that don't get it" is akin to discussing astronomy with a flat-earther. Facts simply can't penetrate the bozone layer that surrounds such people. They know the TRUTH, and that's all there is to it.
I am continually amazed at the MAGA-heads who are somehow deluded into thinking that Trump has made their lives better. They are like the frog being boiled one degree at a time. Their costs are going up as they pay for Trump's tariffs. They got hit with a larger tax bill last April because of the cheap trick of under-withholding their paychecks so they thought they got some benefit from the tax bill. They persist in thinking that Trump is still going to "turn things around, because he promised he would." They can wait forever. Trump is not going to do squat for them, but they will already have pulled the R lever in 2020 before they realize that they have been thoroughly boiled in Trump's cauldron.
60
Tax cuts and tariffs are like stone tools and bear skins against a tech fueled interconnected global economy, a burgeoning world population and a planet headed for worldwide environmental alterations. On top of that, a president that relishes in adding an extra destabilizing foot on the scales virtually every day. What could go wrong?
24
When will those corporate Republicans decide that they’ve had enough of Trump’s whims and start backing—and donating to—someone else? They’ve gotten their tax cut, but is that enough to make them want to still back Trump, when he could start another battle in his trade wars at any moment? I mean, those corporate types have been telling us for years that chaos is bad for business; so why are they still voting for it?
Those corporate Republicans would be better off with Bernie Sanders. He may not be corporate capitalism’s biggest booster, but at least you know where he stands. And he actually takes stands and has positions; he’s not ruled by caprice and whim, like some people I could name.
7
“Imagine how much better shape we’d be in if the hundreds of billions squandered on tax cuts for corporations had been ...” completely wasted by big government instead of spent thoughtfully by the people that earned the money in the first place.
Ok. Paul.
1
Spent thoughtfully on stock buybacks? Sounds more like repetitive ignorant conservatism than happy liberalism to me.
3
"spent thoughtfully"? On buying back their own stock?
3
@Happy Liberal Spent thoughtfully? Only if you consider buying back your own stock to artificially inflate its value and pump up the market to be thoughtful spending. Only if you have no problem with corporations contributing nothing to support the government that made it possible for them to earn the money in the first place.
Okay Happy Liberal.
3
The op-ed states that Trumps economic hacking isn't bad enough to do serious damage, although it saps economic confidence.
It would be really interesting if Dr. Krugman could put together a column wonkishly exploring the following questions. For all I know, we may well find out the answers at some random time, during Trumps term(s):
1. What if, when Henry Paulson went to the White House asking for substantial injections of liquidity into the economy, he had been asking Trump rather than Bush for help? Would Trump's Kudlow-style response that such interventions were ill advised have precipitated a complete collapse of the financial system?
2. What if, instead of Dr. Bernanke, some of the people floated up by Trump had been running the Federal Reserve, starting in the fourth quarter of 2008? Would we have had a repeat of the Hoover administration? How long might the consequence have lasted?
There may be a few people left alive who remember the utterly absurd reactions of the Republicans to the events of 1931 and 1932, but what we all might use is a lesson in how making the wrong decisions at critical times could cause the destruction of the banking system, a drastic implosion in the money supply, and a decade-long catastrophe.
Every day those lunatics pull the levers of power with their willful ignorance and conflicts of interest is a day that something might snap, requiring a response that never will come due to the substitution of pagan rituals for plausible solutions.
24
Actually, what I’d be really innarested in is seeing more of the languid types learn enough to research such issues for themselves.
I'd like to hear more from you on how good or not so good the economic structure is.. Like, workers may think things are great because jobs are available but have no sense that their pay is not keeping, that the added cost of health care is making their salary less, that allowing corporations to not pay is leading to long term (and now) decline in Medicaid. And of course is allowing more pollution a health and economic problem.
4
I love Krugman, but his premise is naive. The tax cut was never expected to cause a “surge in business investment”. That was just the selling point, for the rubes. The tax cut succeeded brilliantly as designed, to increase the wealth of the wealthy. That’s all it was meant to do. As for Trump’s tariffs, they’re another ruse, sold to Trump’s naive base as evidence that he’s a tough guy, a “stable genius” wheeler dealer who’ll make those other countries kowtow. Trump’s supporters will never know that the tariffs have backfired, because Fox News will never report it. And you can bet that none of them are reading Krugman...
56
@John Ranta
Actually that is in the column that tax cuts are only for the rich.
"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."
So his premise is not naive.
5
@John Ranta Exactly! The ridiculous fiction that tax cuts lift the entire economy is believed by the credulous in exactly the way that Charlie Brown falls for Lucy van Pelt's football trick. The credulous never learn this because, as you point out, Fox News ignorance circulates as powerfully as knowledge.
3
@John Ranta I'll grant you that's the goal of the tariffs, but that's naïve *itself*: sacrificing meaningful things to prove non-existent toughness that's self-defeating and seems to perpetually indicate a complete inability to comprehend how they actually work. Perhaps I just expect so little this seems reasonable, but every time I hear "China's paying for our tariffs", I feel like he actually believes it's true and is really just too stupid to understand how they work--and thinks they're *functionally* proving him to be tough and will eventually lead to capitulation.
See also:
"The stock market doesn't understand that things are good," it's this notion of "How weird, the world doesn't understand how great I am and is responding incorrectly to my tremendous actions!"
Would that I could post that Principal Skinner image: "Am I out of touch? No, it's the children who are wrong."
3
I would like to see Dr. Krugman answer these questions.
I do not see any problem with liquidity in the markets, here or abroad. The Fed rates were already accommodative. So how are rate cuts going to stimulate the markets?
Is it not the case that consumer demand is much less than the available productive capacity which is why the central banks can't create more inflation.
6
When will those corporate Republicans decide that they’ve had enough of Trump’s whims and start backing—and donating to—someone else? They’ve gotten their tax cut, but is that enough to make them want to still back Trump, when he could start another battle in his trade wars at any moment? I mean, those corporate types have been telling us for years that chaos is bad for business; so why are they still voting for it?
Those corporate Republicans would be better off with Bernie Sanders. He may not be corporate capitalism’s biggest booster, but at least you know where he stands. And he actually takes stands and has positions; he’s not ruled by caprice and whim, like some people I could name.
3
Following Trump's election, Krugman suggested that "we are very probably looking at a global recession, with no end in sight."
Ultimate fail.
1
@Sumner Madison
Yes, our President's economic policies have been a failure, as Mr. Krugman noted here.
6
@Sumner Madison True but Krugman also retracted that claim shortly thereafter.
Which Republicans are retracting from their PROVEN FALSE claims that tax cuts on corporations spike sustained investment in domestic labor and capitol? None?
Go figure.....
10
@Jaffa Bozare
You deny how the economy was already doing well under president Obama. Trump is riding the coattails. Unfortunately his economic decisions have all been bad and have hurt farmers and other others.
Though he was willing to give welfare to the farmers. Something that republicans always object to except when it is their own people.
4
Here is an interesting fact. There is about 30 billion dollars worth of stock traded on the New York exchange every day. If a tax of one penny for every ten dollars traded were applied it would yield about 30 million dollars per day or about 9 billion dollars per year. That money could be applied directly to infrastructure or health care or water treatment and make a significant impact...now if we took a penny for every dollar....
99
@Jaffa Bozare They can spare a penny of their gigantic profits.
2
@Jaffa Bozare Jaffa I wrote a reply to your reply earlier but it did not get published so here I go again. In Q2 of 2019 Sachs made 28 million profit a day in trades. Now I am not sure how many firms there are buy I am sure there a quite a few so if we drop to half a cent per 10 dollars earned I doubt that the hit would be so great as to end capitalism as we know it.
1
Trump raised taxes AGAIN on hardworking Americans with more tariffs on China today thereby assuring that farmers across the country will go bankrupt soon as well as other small businesses.
Trump said at a campaign rally tonight in Ohio that childhood cancer will be cured soon. What will he say next that Trump voters will continue to applaud for?
29
The strength of Dr. Krugman's argument is in the following sentences, "On the other hand, think of the missed opportunities. Imagine how much better shape we’d be in if the hundreds of billions squandered on tax cuts for corporations had been used to rebuild our crumbling infrastructure. Imagine what we could have done with policies promoting jobs of the future in things like renewable energy,..." President Trump was given an opportunity few presidents are given, a "Goldilocks" economy, and an opportunity to do some real good for our country and its people by investing in our future. Instead he proceeded to give all the gold away to the very people who need it the least. Three years later, we are running a trillion dollar deficit, the economy, especially the manufacturing sector is slowing down, and nothing, nothing has been done to improve our nation's crumbling infrastructure.
57
We're painfully aware every day that Trump the Terrible hasn’t made the economy great again, and that he runs on blatant racism.
So Paul, what are a few of the economic solutions you might propose? What candidates have good ideas? This is what we need from a Nobel economist concerned with inequality.
Give us some concrete detail on reversing tax cuts on the already rich, rebuilding our infrastructure, etc.
This would be more constructive than anti Trump, all the time.
Find examples ---in what countries are tax levels more fair and adequate? With infrastructure---how much do they spend compared to U.S.? What are results for their economy and their citizens? This is basic information we need.
And compare to America's own past, when tax rates under GOP Pres Eisenhower were 91% marginal for highest incomes. Yet, business was profitable.
And under GOP Ike, the federal govt undertook history's biggest infrastructure project--our interstate highway system--a huge economic stimulus with jobs, new suburbs, schools, businesses, and car and home buying, etc.
It's these positive role model examples that will best influence public opinion, and put pressure on our politics to effectively oppose GOP/Trump and corporate dominance of policy.
And if you can squeeze in a paragraph about how dozens of countries finance health care for all, please do. I'm sure it would be very interesting and constructive for readers-- it's only our hottest and most confusing issue for 2020!
29
Totally disagree with Trump (GOP) trade war and the tax cuts. But I would love to see a serious treatment by someone like Dr. Krugman about possible upsides/downsides to the redistribution of manufacturing because of the tariffs. As manufacture shift production to Vietnam, Laos, and Cambodia, etc. is there/isn’t there possible economic and political upsides by- in a way- destroying a state monopoly (China)?
4
@Brian Camp
Except now the chinese are selling to europe and other places instead of the US. There are many buyers in the world.
The billionaire class seems to be doing well.. and they are all that counts..
22
Just heard today, the interest on the national debt is $400 Billion this year. McConnell is saying the debt is caused by Social Security and Medicare expenses. This is the GOP that has a history of criticizing the debt, and demanding spending cuts for years, then passes a tax that expands the debt by more and faster than any time in history.
The whole GOP senate has adopted the Dishonest Donald lying theme. They have discovered that if they tell them often enough and keep repeating them, those die hard conservatives will believe them. As we know, the first people to profit from a tax cut to corporations are the stock holders, and the major stock holders are on the boards of directors. These are people for whom there is never enough to satisfy their wants. Got a Boeing 757, not good enough,they need a 777. Companies do not expand jobs until there is a demand for more of their goods. You don't add production until you see a long term need for it, otherwise your money just sits there earning nothing.
Now the GOP and its chief swindler are acting in unison, the great swindle is upon us.
85
Dr. Krugman,
I agree with most of what you wrote, but believe you are wrong when you say that 'pundits who think that Trump will be able to win by touting a strong economy are almost surely wrong'. Let's be honest here--most people have no idea how the economy is doing. They only experience the economy anecdotally through their lived experiences. Some may watch the market as well to check on their 401Ks, but the market is doing fine, so even that subset of voters are going to be largely complacent about the state of the economy.
I'm not sure it's wise to attack Trump on the state of the economy unless there is a material slowdown before the 2020 election. Let's be honest about another thing--that's why Trump so desperately wanted a rate cut from the Fed. That was a rate cut for the rest of the world more than anything else. At some point, loose monetary policy and even looser fiscal policy the world over will have its reckoning.
While a part of me hopes that day never comes, another part of me is rooting for it to happen tomorrow so that Trump can't PT Barnum his way into another term in office on the back of an ostensibly strong economy built on a house of cards. Sadly, the deck's joker is sitting atop this house of cards smoking a cigar and ashing wherever he likes completely unaware of the hazard he poses.
But when I watch the Democratic debates, I'm not seeing the candidates talking through these issues. We need to stay on message and not take Trump's race-baiting.
4
Brilliant article. "Imagine the possibilities" is perhaps the most disheartening thought about the Trump administration. Instead of fostering a fearful nation, we could have extended America's lead for another generation. Now, Trump is accelerating America's demise by generations.
25
Trump's economic policies are a sham, but how to get that point across? Understanding the mechanics of how stock buybacks are are a criminal gift to the already wealthy would inspire outrage in almost anyone, and the whole idea doesn't take more than a couple of minutes to explain, however the current debate format, which has really now existed for decades, won't allow for even the smallest digression; it's either zingers or nothing. Likewise with how tariffs are ultimately paid by the consumer, or how Medicare for All would lower a family's overall expenses. How can we have a functioning democracy when both written AND spoken discourse are reduced to 140 characters? Voters are smarter than are given credit for - not much, but at least a little. I'm sure this format is fine with some of our politicians, even Democrats, who'd rather not have to flesh out the ideas they either don't have or are embarrassed to reveal, but it is a great disservice to those who actually have something substantive to say. Someone pitching a new can opener on "Shark Tank" gets more of an opportunity to present themselves than someone running for president.
7
The largest tax breaks in history for the 1% does not deliver because the multinational corporate elite do not care about America, they care about their self interests in the world. We could have had infrastructure, green energy and better paying jobs. But when you have a narcissist disorder autocrat in the oval office, self interests "trump" the actual care for the nation and its' citizens. And, lowering the interests rates will simply drive more dept and will be the Trumponomics version of the GOP's 2008 economic disaster.
18
Actually, he keeps bragging about how good the economy is even as he badgers the Fed to fix it with rate cuts because it isn't. He cites low unemployment numbers without asking if you want fries with that. He is (or claims to be) one of the ultra-rich to whom it is obvious that the purpose of low taxes is so they can keep more money.
Trumponomics is part of his mythos that not knowing about how things work is the key to smashing them so they get fixed. You know, 'creative destruction'. Who will fix them and how? And for whom? His super-great genius and his 'all the best people', of course. The ones he hasn't fired yet.
22
A third tenet of Trumponomics was that deregulation would spur economic growth. We've had the deregulation---whether through executive order or overt administrative sabatoge of clean air and clean water regulations---but no noticeable change in long term growth projections.
45
I think dr. Krugman’s overarching premise, that Trumponomics is intended to produce economic growth, is false. First and foremost, Trumponomics is intended to retain trump voters, secondly, to attract donations from wealthy individuals and corporations for trumps reelection campaign. So what we have is a war of rhetoric on them durn foreigners to keep the white working class happy and huge deficit funded tax breaks for his campaign supporters, to be paid for later by our children. So by that account, Trumponomics has been very successful. It perpetuated the Obama recovery from the Bush financial collapse, is keeping his base loyal, and funds are pouring into his campaign coffers. What’s not to like about that if you want four more years of having the cowardly liar as chief of State?
8
@doug mclaren
I don't agree.
First, I don't agree at all about Prof. Krugman's overarching premise. Trumponomics is at most intended to let Trump talk about growth. Krugman suggests no more than that, which he didn't even state explicitly.
Second, Trumponomics is mostly GOPonomics, which is principally intended to redistribute wealth upward to the top 0.1% with some spillover to the top 1% or 5%.
Third, I'm sure there's merit to your second suggestion, which is a corollary of my second suggestion, but it is not as important as Trump's support of class interest, i.e., the welfare of the top 0.1%.
Finally, there is some merit to your first suggestion.
3
@Doug mclaren. Oh brother. And democrats simply look to buy votes. Let's see, college kids with free college and loan forgiveness. The under 26 crowd that was allowed to opt our of Obamacare and be carried by their parents. Blacks with reparations, Hispanics with an open border, unions with no Cadillac healthcare tax, mandatory dues. Teachers with a new federal program that would pay them another $13,500 a year from the federal gov't. Oh let's see, trans in the military so taxpayers can foot their medical bills. I'd call it bribery and vote buying. And yet look at all the squeaking from democrats over putting a cap of state tax deductions? Funny to most of us, but back to the standard democratic refrain, what's mine is mine and what's yours is mine. Obama getting credit for the economy? How low can you get?
@Thomas Zaslavsky
Thank you, I appreciate your well reasoned reply to my comment
2
While Dr. Krugman’s points are intellectually valuable, his practice of diminishing erred past predictions to support current opinion are not. A neat academic trick that works well when the inevitable recession hits and he can say “ this is what I’ve been saying all along”.
There are real problems looming for this feel good high economy right now, but I can say for certain that they are not SOLEY due to recent tax cuts, tariffs and other cherry picked opined economic theory.
2
I own a small manufacturing business here in the US and import raw materials from China. The new tariffs tRump has proposed will finally hit us. I will probably have to cut hours or an employee and will be making fewer goods here. How exactly does that help?
32
That has nothing to do with corporate tax changes, with all respect.
@Steve Cohen Just wondering did you fall the the TRUMP spiel and vote for him?
@Steve Cohen Blame Hillary.
Ask any trump voter if they are rich, or if they are better off now than they were two two years ago.
They won’t have a good answer.
9
@Joe
It doesn't matter, most of Trump Voters do the equivalent of putting their fingers in their ears and go nya, nya, nya, I can't hear you, clueless liberal. The Propaganda Organs continue to tell them (Trump Voters) what a great job Trump is doing, and they tune out anything different.
3
When I'm deciding whether to make an investment, tax rates obviously have nothing to do with it. I mean, if there's some enterprise that will turn a profit, if you can buy T-shirts for $2.50, print logos on them, and sell them for $20, what do taxes have to do with it? You only pay them when you make a profit.
7
To the folks saying Krugman is always wrong just look at what Trump said for a moment.
He claimed his tax cuts would usher in 6% growth or more. It didn't happen. The 3.2% growth is fading fast.
Trump claimed the world would respect us but even our poodle Great Britain doesn't support us anymore. Putin has gained more with his election interference than he could have with open war and for a lot less.
Trump claimed Trade Wars were "easy to win" but the only winners in his trade war are bankers and multinational corporations as they take over more and more of the economy. Family farmers not catering to a local market are losing their farms as well as their shirts.
The Pied Piper of Hamlin has nothing on Trump. His followers don't even know when they've been fleeced. And on Korea and Iran he's a complete failure.
126
The Trump tariffs are nothing more than the BAT that Paul Ryan as pushing as part of his tax plan. The BAT was necessary to keep the deficits for the tax cuts at 1.5 Trillion Dollars. The Republicans left out the BAT when they enacted the tax cuts without Democratic support by using the reconciliation gimmick. The tariffs are here to stay. Without the tariffs the budget deficit will exceed $1.5 trillion every year
8
Let's look at the record:
The tax cuts did boost the stock market, because they funded a mammoth buy-back of shares by corporations. As the market is the only place that one can obtain returns right now (TINA or There Is No Alternative), a cut in supply led to a price increase. The low interest rate continue the TINA market, at least for now.
The tariffs have, so far, not had a major effect. But it is only a matter of time until the increases on Chinese goods will result in a price increase at Walmart.
Unemployment is low and workforce participation is increasing. Wages are finally rising (although in real terms after inflation not by much). But most families are one paycheck away from disaster.
The huge deficits are also having the effect of supporting the economy.
It should be clear that we are in the late stages of the business cycle. To be sure, expansions do not die from old age, but they are vulnerable to any sudden shock, such as fallout from Brexit or a major corporate bankruptcy.
The next recession is coming. The only question is whether it occurs before or after the 2020 election.
(And of course, when the Democrats take over the GOP will be shocked, shocked, by the massive deficits!)
188
@John Graybeard
As far as the tariffs and rising prices you reference, Trump and his toadies are safe on that one. They are insulated from the blame by distance. Many of the things from China which are tariff impacted are not items purchased on a regular basis, like food, so people are not aware of the consequences. And intermediate goods which are in the supply of manufacturing are basically invisible to most people.
However, if retailers and manufacturers started putting notices on goods that say the price of this object is higher because of tariffs enacted by President Trump, we might see some action.
Their policies in this, and other areas, do not yield immediate results. It takes time for the consequences to happen so they can claim no relationship. Unless the Democrats are in power. Then there will be a relationship but it won’t be their fault.
Lying and hypocrisy raised to astronomical levels.
8
@John Graybeard
The next recession may very be worse than The Great Recession because, consumer debt from misplaced "consumer confidence" is loading those bonds again. Consumer debt is the new "subprime" debt. Ask you friends and family how many credit cards they have and how active those cards are.
The issuance of credit cards is higher than ever simply because the bar was lowered and lowered again. We have all gotten those card offers from obscure "banks", as well as our existing banking institutions. That has spurred irresponsible consumer spending, and that debt is what is loading up those bonds. A few years ago, lenders and car dealers invented — wait for it — the 96 month loan. That is how dealers managed to unload lots full of cars and trucks.
And, as Michal Lewis illustrated in "The Big Short," there will be at least one hedge fund manager who will invest in those bonds while buying insurance from AIG against the coming losses.
So, dear fellow readers, the Big One is coming and it will require "belts and suspenders" to survive it.
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When you say, "after the shock of the election wore off," what you really mean is after you had already been proven wrong in your initial prediction that the stock market would never recover.
We have good growth, the lowest unemployment rate in fifty years, a rising labor participation rate, good gains in the investment markets (which means better retirements in the future), lower and middle class Americans experiencing real gains in both income and wealth for the first time in many years, and low inflation. If this is an economic flop, let us make the most of it. We need keep this economic flop going as long as possible. When you talk about the Trump economy (Paul Ryan deserves more credit than Trump), you almost make me want to vote for Trump in 2020.
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@Charles
Trump and Ryan predicted the tax cuts would be at a minimum revenue neutral, and at best would actually help reduce the deficit. Wrong by a trillion dollars and counting. Trump predicted 4 to 6% growth rates on a regular basis. After a post cut surge growth is slowing 2.1 the last quarter and it looks like 2.5 to 3.3 is going to be the best we can hope for. Trump predicted 6 new US Steel plants were going to be opened he "heard this" somewhere. One reopened old plant and zero new plants. Because Trump is a economic savant that knows more about the economy then any economist he declared that trade wars are "easy to win" The Trump team has predicted a agreement with China was just around the corner but victory day keeps getting postponed.Trump guaranteed the people of West Virginia that there old coal jobs were going to be restored under his leadership but they are still waiting by and large. Whatever small amount of tax relief received by the vast majority of the population has been taken away with higher prices because of his tariff war.Despite 26 billion of support for the agriculture community farm bankruptcies are increasing under Trump. How many false promises not kept, predicted projections not met, does it take to show to you that Trump has no idea what he is doing?
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@Charles: For my personal circumstances I can't complain about the current economic situation--for the moment. But tell all of that to the people who write in here to say that they can't get by on their savings because interest rates are too low and the reported inflation rates don't measure the real rise in their cost of living. There are many people who are struggling to get by outside the rosy glow of the picture you paint.
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@KJ Peters If your point is that Trump says ridiculous things and his rhetoric is often unmoored from reality, you get no argument from me. That, however, takes nothing away from the state of the economy, which is better than it has been in a long time. And Trump is not the only one making predictions that have not come true, that category would also include Dr. Krugman and President Obama (maybe it's a symptom of getting a Nobel Prize you don't deserve). Look, you Democrats will be better off sticking to your fantasy that the improved economy is because of Obama--that's not true--but you are not going to be able to sell Americans on how bad things are.
I grew up in the old thriving post war America in which manufacturing was the engine of massive growth and admirable lives. There is no denying manufacturing made more than products, it was "Made In U.S.A."
From my young years I climbed through various manufacturing centered jobs that taught me the value adding wonder of it. From some cheap raw materials, a machine, a small amount of energy, and a person gaining satisfaction through labor, we created wealth. We shared in that wealth and so did the owners. We got vacations bonuses, and good times.
Then manufacturing began leaving. Labor organized and was scorned. Japan put economic pressure on our bottom lines, and the jobs and machines were sent to China to compete, a dirty word in my nationalist pride mind.
So now manufacturing is elsewhere. What will we do if our nation is isolated militarily or politically? That was the question that drove me to alarm. Trump followed the lead, got elected and won partly on the issue.
But why haven't the companies returned their manufacturing? There is no legislated protections. The tariffs penalize the consumers, and manufacturing is declining still.
Where will we get boots if we are isolated?
More than tariffs and tax cuts need to be done and three years of time have been lost using the wrong larcenous ways. Everyone is cashing in on the loss.
Would you expect less from the Trump Wall st Administration?
We need protectionist legislation to survive in the future.
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@SHAKINSPEAR
You can get Corcoran boots made in Pennsylvania - they have not been outsourced. You will have to pay for them, kind of like Phil Wood hubs but not as extreme. Most boot buyers as well as bicycle enthusiasts prefer to pay substantially less for boots and hubs made overseas.
@SHAKINSPEAR. One of the justifications for the European union was that countries with inter-dependent economies will not go to war with each other.
One of the restraining factors on Trump during his trade war is the pressure from businesses whose supply chain sits in China. Else who knows what he would have done.
Your point that a country needs to be self sufficient in case of war is valid. However, the bloody history of the 20th century shows that the advanced, self sufficient countries (Germany, Japan, US) were more likely to initiate wars to further their political interests.
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Meanwhile, the GOP dismantled the unions that need those manufacturing jobs worthwhile. Voting Republican to bring them back is a fool's errand.
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President Trump is interested in one thing only: what he thinks will keep the economic gears turning so that his narrative of economic strength can keep appearances up for his 2020 campaign. Nothing else matters, except for his appeal to the ingrained bigotry of his base.
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Republicans don't actually believe that tax cuts work; they just pretend to in order to justify shifting wealth to their corporate sponsors.
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@Eileen Hays Yes, it would be good if they were forced to wear badges on their suits representing all their "sponsors", like race car drivers, when in your Congress, because they don't represent their voters, they just pretend to - but the same is true for centrist Democrats. Hence: vote for Warren or Sanders.
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@Eileen Hays
Yes Eileen, shift the wealth upward and then demand that we cut the social safety net which "we can't afford" when tax revenues decline. They never really believed cutting taxes would pay for itself. It's always been about cutting social programs.
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@GRW This idea (politicians wearing badges like Forumla One racers) was Texas Rep. Jim Hightower's great idea from at least twenty years ago. If only it had been taken up.
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Your are wrong in that there is a policy or a plan behind any of the Trump or GOP approach to economic or fiscal planning, as there isn't any. The biggest detriment of the tax cuts starting with those in the Reagan administration have been to increase and further exacerbate wealth inequality. The evidence ia ample that the growing wealth disparity is a signifance source of the current economic angst. However, since most people do not want to see the connection, in part, because it is not instantaneous and, in part, it goes against the dogma of individualism, correctiong it will remain a challenge.
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Just think about this. If trump imposes a 10% tariff on $300 billion of Chinese goods, then (assuming no change in purchasing from said country), $30 Billion will be collected from us (not China), and presumably the budget deficit will be reduced by that amount. Of course, purchases of Chinese goods will decrease somewhat, but we consumers will still be helping to (slightly) reduce the republican-created deficit. Think about that when you purchase your next iPhone or washing machine. Sounds like a great idea.
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@Old Doc
It doesn't work that way on this plane of existence. Retail prices on washing machines (and dryers), news reports keep pointing out, jumped by over twice as much as would pay the largest tariff on them - even the ones without any Chinese inputs! So Americans buy fewer and pay lots more than goes into the treasury. Also, many Chinese parts used by American manufacturers now cost enough that manufacturers from other countries will now be selling such goods. $30 billion to the Treasury for the deficit? Trump and his minions want the deficit and the debt to rise, and they are very successful. Trump has already promised but not yet delivered most of that as welfare to farmers and others hurt by the trade war.
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@Marvant Duhon: Perhaps I did not make myself clear enough in my comment. I think that the tariffs are a terrible idea. We, the citizens of the US, will be paying them. Any benefits to the treasury will be minute when compared to the damage they are doing to our farmers and manufacturers. Trump has no grasp of basic economics and will eventually cause our economy to crash and burn. The reduction of interest rates passed by the Fed yesterday is, in large part, a response to the uncertainty caused by Tariff-man.
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@Marvant Duhon
"Trump and his minions want the deficit...."
Spot on. Consider what a national debt/deficit is: the citizens of means don't want to be taxed so they encourage the gov't to borrow... that is borrow from these same citizens who can afford to lend tto a gov't at safe and significant interest rates hard to match in the real world. So the wealthy can have their cake (expenditures to improve those things in infrastructure they, the wealthy, want and need but don't want to pay for) and eat it too (avoid taxes at all costs through loopholes and let the peons pay for it). Pretty neat, eh? Which leads to why the wealthy are so set against the welfare state in which they gain no profit; it dilutes their cake consumption. All of this is part of what Adam Smith suggested in his great work, outside of the normal talking points.
Not my ideas, something Prof. Mark Blythe suggested in a video.
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Trump will continue to promise to save coal, to bring back manufacturing, to provide the perfect healthcare system, higher wages for the “forgotten people”.
Of course, he promised all that the last time, but those were just a fraction of the 10,000+ lies, but his cult will vote for him anyway.
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Trumponics may not be working in Krugmanland, but in reality unemployment, particularly among African Americans and Hispanics, is at all time lows. The stock market is at record highs. Trumps tax cuts and deregulation executive orders have created trillions of dollars in wealth. Even leftists can’t be disappointed with the performance of their 401(k)s since 2017. I wonder how much Krugman’s net worth has increased since Trump’s inauguration? I guess Trump found that magic wand that’s Obama said he needed.
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@Registered Repub
If you're fortunate to have a 401k or stock or savings.... What you folks aren't hearing is the massive numbers of people who have no investments, who live paycheck to paycheck. And now, if you miss one house payment (on a recent bank loan), you are "in default" and the bank can start action against you. One medical emergency might upend your financial stability. A lot of people live with fears of automobile breakdown/accident or difficulties of trying to save. Food prices have been rising this last year. For people with low incomes, this is a big deal. But do we hear about it in the news? No, we hear another divisive tweet and the cheerful news about the stock market rebounding. If the homeless situation and housing gentrification gets much worse, maybe someone will creatively bring up the French Revolution.
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@Registered Repub
If the Obama economy has continued despite Tsar Trump, it probably could do well with anyone.
And it would probably be better yet if Republicans hadn’t tried to sabotage his initial stimulus.
The only wealth that Trump’s tax cuts have created are for Trump, his friends, corporations, and the .001% who already have more money than they know what to do with.
Lots of minimum wage jobs though. Enough for everyone to have as many as they can handle.
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@Registered Repub
All of your data points are essentially on the same trajectory as under Obama's 2nd term (after he rescued us from the precipice of the Great Recession). I guess we should be grateful he hasn't mucked that up? Aside, of course, from the ballooning deficit (which is on the opposite trajectory from Obama's 2nd term). There is no magic wand here outside of the Fox News echo-chamber.
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If one reads Krugman writings since the election, he as continually predicted disaster. His tone seems to imply he is eager to since Trump fail. Rooting against the economy, quite openly.
Meanwhile, unemployment is down and wages are finally rising.
The stock market just made record highs.
Capital investment is rising.
Business is growing.
The shackles of Obama well intentioned mass and morass of regulations has been lifted.
It’s working
Sorry Krugman your wishes are not coming true
8
@Joe economist Open your eyes "Joe economist:" - the deficit per month is 2/3 as large now as at the height of the Bush min-depression when depressed wages depressed tax income and huge sums of money were going out to pay the unemployment insurance of the laid-off. The Fed has had to reduce interest rates because the economy looks likes it's slowing. You are lying or misinformed about capital investment - there was a brief blip at the time of the cut but it is below rates at the end of the Obama years now. The market just had a huge drop.
Well, I hope you're ready to buy more stocks because I have some to sell.
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@Joe economist
"If one reads Krugman writings since the election, he as continually predicted disaster."
I am sorry, but your assertion is simply not true.
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@Joe economist On election night he predicted a global recession with no end in sight. He’s the Thomas Malthus of our time.
2
To succeed in business one must profit. Any business student has been taught about breakeven points, fixed and variable costs, margins, and units sold to achieve breakeven. In plain English, nobody makes profits from manufactured goods until all the costs are covered, then how much is sold determines profits made. Making a lot of stuff that cannot be sold amounts to losing a lot of money from a lot of production.
Tariffs raise the costs on every unit, so they reduce margins. If they eliminate margins or shrink them to where additional units to make up for the loss cannot be sold, prices must rise. If prices rise, there will be reduced sales of units but not necessarily fewer total dollars. But business would still be declining.
Taxes cannot affect profits until there are profits to tax. Investing without assurance that the investing are likely be profitable dissuades investment. That means that the notion that tax cuts lead to more investments which leads to greater sales and revenue, is illogical. What it leads to is lower revenues more likely that greater ones.
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I am fine about Tarrifs of China because they are about far more than the free market. I don't like forced tech transfer and tech theft. Nor do I like funding the unelected The People's Republic of China which is not "The Peoples" at all because the lack of elections means there is no concent of the governed.
Across the board Tarrifs are not good but i can accept tarrifs which move production from an advisary like PRC to friendlier nations like India, Taiwan, and South Korea.
Do you concur?
This is a teaching article. A must read for all history students. What's interesting is how high corporate bond debt remains, in light of the recent tax cuts. The excuse being that borrowing costs are so low, why not borrow now? Instead of paying down debt, many huge corps opted to buy back stock, increasing mid-range shareholder value, but not long-term.
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The Republican Party has no policy platform other than tax cuts for the rich. The progressives won on all social issues and eliminated the antediluvian social platform of the GOP at the national level. They still play their social experiments in their rural states with reckless abandon.
Trump has done nothing except the tax cuts for the rich but he is trying to ride his economic luck to another term so he can run out the statute of limitations and avoid jail term. That’s a huge motivation for anyone. So he is gonna do everything in his power to divide the nation and eke our yet another electoral college win while losing the popular vote.
So between now and the election he is gonna amp up racism, accuse democrats as socialists and open border people and throw the kitchen sink in America and see what sticks. The dems need to keep their cool and not fall for the traps set on elimination of private insurance, illegal immigration, free healthcare for illegal
Immigrants etc.
The key to beating Trump is expanding Obamacare, climate change actions, tax on the rich to be used for infrastructure, Education and healthcare, Russian influence, corruption, division of the country, damage to democracy, racism, and loss of basic decency.
America is at crossroads and it’s time to push into the future and away from the past. We are a diverse country and no matter what Trump does , it’s not gonna be reversed. Let us unite around core values and ideas that’s gonna define the new America.
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@Thought Provoking
"Tax the rich" is really "Make the rich pay their fair share, which they have not done for decades". The former sounds too much like "off with their heads" and plays into the right's argument that tax reform is just about envy of the successful by the plebes.
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@thought provoking, well said; a disaster looms for our children and grandchildren I fear. Like George Bush he won the votes from the very people he is hurting the most.
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@Thought Provoking Well I'm tired of we can't do that, only Republican lite is the only way to win. I'm ready for bold, I'm ready to move the cheese. Make people find their tennis shoes and get a move on. All these progressive ideas sound sooo scary, they're not, they're just new. Just like your first smart phone you'll get into it. Some of them sound so far out there and some are but Democrats will do what Democrats do talk, discuss and mix it up until they get a consensus and run with it. It's what you call a working democracy, something the Pubs don't understand.
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The tax cuts, which Trump heralded as evidence of his business prowess, are old GOP ideology. The tariffs, which will sooner or later become a drag on the economy, are Trump's baby. Trump owns the tariffs.
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Every time Trump tweets about how he has given America the best economy in the history of the universe, my fellow New Hampshire wag (Obadiah Youngblood) tweets back, "Thank God for the Obama Recovery."
Would that some of the Dem politicos would pick that thought up and run with it.
Far as I can see, Obama saved the train from running off the cliff and it's been gaining momentum ever since.
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@Claudia
I agree that it's Obama's recovery. But to correct your last point, actually, as Krugman makes clear in the article, the train that Obama saved from running off the cliff has been losing momentum since Trump was elected.
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@Claudia. Well, it could have been better if Congress had not blocked Obama from pumping more $ into the system that could have actually improved the lives of average Americans. Irresponsible corporations received the benefits instead of suddenly underwater homeowners. I can't forgive Obama for leaving us out to dry.
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@Claudia It WAS gaining momentum until the impulsive tariffs and the tax cuts to corporations that had them buying back their own stock instead of investing in growth. Can you imagine where this economy would be if we'd invested in infrastructure projects? Not only a healthy economy but no longer vying to be a third world country.
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Krugman has been rooting for recession and predicting disaster since the election.
The economy is strong
Wages are rising
Capital investment is growing
Krugman is frowning
Glass half empty
Where is his mea culpa?
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@Angry liberal
"Angry liberal" from Brooklyn -- or should I say "Joe Economist" from Brooklyn -- with the same phrases and talking points:
We're not fooled. The economy has held steady, but nowhere near the growth Trump promised, because better angels have balanced against Trump's disastrous trade wars and the rising deficits have injected a short term sugar high.
The bill will be paid, and the downturn is going to hit Trump's re-election effort right when it's his only leg to stand on. Well, besides the racism.
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@Angry liberal
Corporations buying back their stocks is not rising capital investment.
Yes, regulations are going away, so it’s a lot easier to make lots of money if you can pollute all you want and defraud people.
The child cage and private prison industries are doing great.
Farm bankruptcies are at record levels.
There are enough minimum wage jobs for everyone to have three or four.
Unfortunately, the only ones getting richer are Trump, corporations, and Trump’s friends.
20
@Angry liberal
Think of it as you, pulling out all of your credit cards and spending to the limits. You will certainly be stimulating the economy in a small way, but sooner or later (usually sooner,) the bills come due.
8