After two years in office, Donald Trump has finally laid out most of his cards on taxes, tariffs and the economy; they eerily parallel President Herbert Hoover’s disastrous policies leading to the depths of the Great Depression in the 1930s.
Hoover’s ill-advised decisions cost Republicans control of the government for four decades through 1968. Only Dwight D. Eisenhower, the commanding general of allied forces in Europe during World War II, could begin to resurrect the party in the 1952 election.
Overview of Trump Tariffs
The Trump administration has increased taxes on Americans by imposing nearly $42 billion worth of tariffs. These include the following:
- 25 percent tariff on imported steel, which amounts to about a $7.3 billion tax increase.
- 10 percent tariff on imported aluminum, which amounts to a nearly $1.7 billion tax increase.
- Doubled steel and aluminum tariffs on Turkey, which is a tax increase of roughly $0.34 billion.
- 25 percent tariff on $50 billion worth of imports from China, which amounts to a $12.5 billion tax increase.
- 10 percent tariff on $200 billion worth of imports from China, which amounts to a $20 billion tax increase.
- Tariffs on washing machines, which amount to about a $0.15 billion tax increase.
Source: Tax Foundation
The administration has also threatened to impose $129 billion in additional import duties on automobiles and auto parts as well as escalated tariffs on imports from China. These include:
- 25 percent tariff on Chapter 87 auto imports, which amounts to a roughly $73.1 billion tax increase.
- 25 percent tariff, up from the 10 percent tariff, on $200 billion worth of imports from China, which amounts to a tax increase of $30 billion.
- 10 percent tariff on approximately $267 billion of additional imports from China, which amounts to a $26.7 billion tax increase.
Source: Tax Foundation
But Trump is no Eisenhower. Coupled with sweeping demographic changes, Trump’s mismanagement, tariff wars, misguided economic policies and general unpopularity almost guarantee he will be one-term president–regardless of the Russia investigation’s outcome.
The way the economy is shaping up, Trump could be running for re-election just as the downturn arrives in earnest.
He’ll also have to contend with sweeping demographic changes that could send Republicans packing across the board in state and federal elections, according to Brett Aitken Managing Director of Stansberry Research, a private publishing and investment research company in Baltimore.
Already the signs are evident.
If only 18- to 40-year-olds had voted in the 2016 election, Trump would have lost Florida, Georgia, North Carolina, Ohio, Arizona, Wisconsin, Michigan and Pennsylvania, according to a CNN voter analysis.
An estimated 10,000 new millennial voters are turning 18 every day this year alone, and they lean overwhelmingly Democratic.
“In short, the passion that we’re seeing on the left – the white-hot registration drives, the massive rallies, and the increasing radicalization – are doing more than fueling a historic “Blue Wave” this November,” says Standsbury’s Aitken. “It will usher in a new era in American politics that could last a generation or more.”
Already, 2020 is expected to be the first election ever where millennial voters outnumber baby boomers.
Democrats polled more than 8.6 million more votes than Republicans in mid-term congressional elections, the largest margin since post-Watergate elections in 1974. The tally gave them a 234 to 199 edge in House seats.
In fact, Democrats also flipped seven governorships, six state legislative chambers and more than 300 state House and Senate seats on election night.
Eerily, Hoover’s Republican Party lost 52 congressional seats to Democrats in the 1930 midterms, setting the stage for Democrat Franklin D. Roosevelt’s election as the first social activist president. Trump lost 45 House seats in the swing to a Democratic majority.
“I know that President Trump will go down as the first one-term President of this century, and almost certainly the last Republican President for a generation – and maybe longer,” Aitken says in a news release.
“History shows it could banish not just President Trump, but his entire Republican Party, from power for the next 20 years or more,” he says.
Trump’s Hoover-like economic policies, erratic behavior and sociopathic lying cost Republican lawmakers congressional seats in traditional Republican red states like Georgia, Oklahoma, Texas and Virginia.
Of significance, Hoover was a one-term president, who served from 1928 until 1932. By then, the country was locked in the Great Depression. Unemployment soared and millions of Americans lost their jobs and their homes.
Shantytowns, most often seen in Third World countries, sprang up across the country and were dubbed “Hoovervilles” after the president.
While in office, Hoover advocated fiscal conservatism and an isolationist foreign policy. When the stock market crashed in 1929, he enacted austerity measures that exacerbated the economic downturn.
He opposed direct federal relief efforts until too late in his term to do much good, and raised taxes at a time when he should have been cutting them.
In 1930, he signed the Smoot–Hawley Tariff Act, imposing 890 separate tariffs on foreign goods. The move sent Foreign trade into a downward spiral.
Hoover also used Mexican Americans and Mexican immigrants as scapegoats for the downturn. He led a massive “ethnic cleansing campaign” known as the Mexican Repatriation.
Between 500,000 and 2-million Mexican Americans and immigrants were deported, even though 60 percent were natural-born citizens. Immigration was slashed by 90 percent.
The economy, however, continued to sink, and unemployment hit 25%.
In 1932, more than 43,000 World War I veterans and family members converged on Washington, DC, demanding to be paid a cash bonus promised for their military service.
Hoover rejected their demands (they weren’t due to be paid until 1945) and ordered the so-called “Bonus Army” dispersed. Violent clashes ensued on the Capitol grounds. The nation was horrified and the administration was stained even more.
Hoover opposed congressional proposals to provide federal relief as the Depression worsened, but finally relented. It was too little too late.
By 1932, businesses had defaulted on record numbers of loans, and more than 5,000 banks had failed, especially small rural banks, according to historical references.
Roosevelt defeated the Iowa native and successful mining executive in the landslide election of 1932. He became the first Democratic presidential nominee to win the popular vote since Franklin Pierce in 1852.
Hoover was elected with 58% of the vote in 1928, a level of support that should have all but guaranteed a second term. But he only won 39 percent of the vote in 1932, a gigantic 19 point swing.
Trump doesn’t even have that luxury. He fell short of his unpopular Democratic rival Hillary Clinton by 3 million votes. He won the presidency by 77,400 votes spread across three key states. It was enough for a majority in the winner-take-all, state-by-state sweepstakes for Electoral College votes.
Since then, he’s seen a significant erosion in his base. His popularity has been trending between 38 and 40 percent. That comes in the face of a ruinous, 35-day government shutdown over his $5.7 billion demand to fund border wall construction.
Trump’s signature achievement, a $1.4 trillion tax cut, came on top of an economy that was already trending to full employment when he took office. The cut, which largely benefits corporations and the wealthy, has not lived up to expectations for job growth and business investment.
But even worse, it’s tied the Trump administration’s hands, should the nation tilt toward a recession. Tax cuts are traditionally used to stimulate the economy during downturns. But the Trump cut is already generating $1 trillion in deficits this year, leaving little room for further stimulus.
It’s also left the government cash-strapped, without the money to fund a much needed plan to repair the nation’s crumbling infrastructure as Trump promised.
Heaped on that is Trump’s ruinous tariff war.
Last year, the administration imposed tariffs on solar panels and washing machines, steel and aluminum from most countries and on 818 categories of goods imported from China worth $50 billion, according to Reuters News Service.
Farmers have been severely punished because of retaliatory Chinese tariffs, forcing the government to spend $10 billion in taxpayer funds to bail them out.
Trump has repeatedly cited tariffs for bringing back manufacturing jobs.
But manufacturing employment is a third lower — by about 6 million jobs — than it was in 1980, and still below 2008 levels around the time of the Great Recession, according to MarketWatch.
“The number of factory jobs, today, is the same as it was the day Pearl Harbor was attacked. All the jobs haven’t come back,” the financial Web site noted.
“Trump’s trade war has helped some industries, but has hurt others, and is at best a wash on manufacturing employment. Slumping manufacturing productivity growth has also flattened the employment gains,” Moody’s Analytics chief economist Mark Zandi told the site.
Higher tariffs on imported goods, of course, aren’t paid by overseas companies. Those costs are passed on to U.S. consumers, according to NBCNews. Tariff revenues make up 1 percent of the economy.
In effect, the Trump administration has imposed $42 billion in new taxes on Americans, a figure that could rise to $129 billion if Trump goes through with other, proposed tariff hikes. The cost fall disproportionately on the poor, according to the Tax Foundation.
Wage-earning Americans, the heart of Trump’s base, are taking the biggest hit.
Although the economic expansion is in its 10th year, real hourly wages for the working class have been essentially flat for two years running, according to The New York Times.
The Trump administration, the courts and corporations have limited the ability for wage earners (82 percent of the economy) to demand pay raises. Over the past year, 2.9 percent consumer price inflation has tracked at just about the same rate as hourly pay increases, negating any added purchasing power.
The housing market is also showing signs of weakness. Worries over the stock market and the global economy are outweighing lower interest rates for potential buyers, the Mortgage Bankers Association reported last month. Homebuilder sentiment also dropped, which could be a harbinger of an economic downturn.
With less than two years to go in his first term, Trump has done nothing to address the issues facing millennials, such as student loan relief, affordable housing, affordable health insurance, climate change, environmental protection and a strong social safety net.
Roosevelt’s presidency could serve as a blueprint for Democratic challengers in 2020.
In the first hundred days in office, Roosevelt massively expand government’s role in America’s economy with 15 major laws that made up his “New Deal.”
In 1935, he created Social Security and enacted the nation’s first federal minimum wage. He used deficit spending to stimulate the economy and imposed a “wealth tax” on the nation’s richest citizens to pay for social programs.
Roosevelt won re-election in 1936 with the largest popular-vote majority of any presidential candidate ever up until that time.
Modern day Democrats are seizing the high ground on issues dear to millennials. Their platform includes a $15-hour minimum wage, Medicare-for-all, which has 120 co-sponsors in Congress, student loan debt relief and a more equitable tax system.
The Trump tax cut has been widely branded as fiscally irresponsible and currently poses the greatest threat to the economy, according to the non-partisan Congressional Budget Office.
The budget deficit rose an estimated $116 billion to $782 billion compared with the year before. Corporate tax receipts plunged $92 billion over that time. The federal debt currently stands at about $15 trillion.
Senate Majority Leader Mitch McConnell is now talking about cutting Social Security, Medicare, Medicaid and other social programs to make up for lost revenues due to the tax cut.
Trump might as well start packing his bags.