Trump Will Not Restore the American Dream

To the extent voters motivated by economic concerns - and not uglier racist and misogynist motives-  cast their votes for Donald Trump, they seemingly ignored the actual policies he has advocated and merely clung to his promise to make things better.  Had these voters paid any attention to the true impacts of Trump's promised policies on the economy, they might well have cast their votes differently. Surveys indicate that Trump did particularly well with voters who paid little or no attention to the news and this category of voters would seem to apply to those who believed Trump's claim to "make America great again."  A piece in the New York Times looks at how for many there are legitimate economic concerns and questions about the direction of the country.   Unfortunately, Trump's promised policies will like exacerbate the problems of those struggling to move forward economically.  Instead of restoring the American Dream, Trump will likely bring higher prices, a slashed social safety net, and a further transfer of wealth to the already very wealthy and large corporations.  Here are column highlights:

Donald Trump got lucky in his first term. When he arrived, inflation was low, unemployment was falling and growth was steady. He applied a bit of juice via his large regressive tax cut, and the economy accelerated without triggering inflation. In retrospect, his term was a bit like a speeding car that got away with it.

This time, he may not be so fortunate.

On the surface, the economy is doing fine, much like it was before Mr. Trump’s first term. But underneath that shiny exterior lurk significant weaknesses, troubles that were well perceived by voters — if perhaps sometimes subconsciously — and played a major role in Kamala Harris’s defeat.

It’s becoming increasingly apparent that the fruits of the economy’s steady expansion are not reaching most Americans. A growing share of our overall prosperity continues to accrue to the wealthy and to corporate shareholders . . . .

On the other end: the young and people who didn’t attend college — including white, working-class men who voted for Mr. Trump in large numbers. For many, the American dream increasingly feels like a mirage.

Start with people who didn’t attend college. While median earnings for all Americans have risen modestly (after adjusting for inflation) over the past 45 years, pay for men with only a high school education has fallen to $1,006 per week before Covid from $1,293 in 1979. A machinist went from earning roughly an average wage to an income more than 20 percent below that of a typical American. Some of these workers have been forced into lower-paying jobs or have never worked since.

Intense competition — not just from China but also from countries such as Mexico — both reduced the number of high-paying union jobs and kept wages throttled for the jobs that remained. Technology has also played a role.

Now let’s look at the young. The American dream, the concept that each generation should live better than the previous one, is slipping from their grasp.  . . . . Children born in 1940 had a 92 percent chance of earning more than their parents did at 30 (after adjusting for inflation). Those hatched in 1980 had just a 50 percent chance.

Millennials born between 1980 and 1984 had a lower probability of owning their own homes and a larger chance of being essentially bankrupt than baby boomers. By age 35, millennials born between 1980 and 1984 typically had 30 percent smaller net worths than their boomer counterparts, although the top 10 percent averaged 20 percent more wealth than the top 10 percent of boomers.

The post-Covid inflation surge, which depressed purchasing power, dealt a further blow.

So it’s not hard to understand why many, disillusioned about the ability of traditional liberal policies to right their ship, were tempted by Mr. Trump’s braying populism. Now this has become Mr. Trump’s problem to solve — although the medicine he prescribed during his campaign will do little to address root causes and may even make things worse.

While inflation has moderated, prices remain higher than younger Americans can remember — and electing Mr. Trump will not return them to where they were.

By placing significant tariffs on imports, Mr. Trump is likely to increase prices even more. When prices rise further, Americans will be forced to buy less, reducing sales for vendors, thus causing them to slow hiring or reduce employee rolls. This is how tariffs cost our economy more jobs than they create or save.

Mass deportation of immigrants would quickly create labor shortages, particularly in critical areas like construction, farming and food production, and health care. While that could theoretically cause wages to rise in the short run, it would also lead to higher costs in all these areas, cutting into economic growth and ultimately leaving many worse off.

Nor should we root for an extension of Mr. Trump’s signature Tax Cut and Jobs Act, which shoveled approximately 85 percent of its largess into the hands of corporations and those making over $75,000 a year.

The new administration will probably turn its back on initiatives that could help, such as more education and more training. It’s also unlikely to embrace policies needed to cushion the blow felt by working-class Americans, including the Affordable Care Act, which brought health care to some 40 million, many of them low income. And instead of Mr. Trump’s regressive tax plan, we need more progressive taxation (“redistribution” should not be a dirty word), to help those left behind. As a matter of fairness, wealthy Americans should be prepared to pay more.

Mr. Trump caught a lucky break in his first term, arriving in time to ride the wave of recovery begun by President Obama. If he fails to raise living standards for those below the top tier, his second turn in the White House may well end badly, especially if he follows through on his counterproductive campaign promises.