The Republican Economic Policies Have Been Disastrous For Most Americans

The Trump economy has been great for the rich - especially the super-rich. They are making more money than ever before, and thanks to Trump's "big beautiful bill" they got a huge tax cut made permanent so they can keep most of those bigger incomes.

But the bottom 90% of the country are not doing so well. Their wages have remained virtually stagnant, and thanks to Trump's tariff-driven inflation (currently at 3% and likely to rise) they are falling further behind with each passing month. And those who did get a small tax cut from the Trump/GOP bill are finding it doesn't come close to covering the increase in the price of nearly everything.

In a healthy economy, higher wages and an increase in the number of good jobs would counter the higher prices. But we don't have a healthy economy. Wages are not increasing enough, and now we learn the economy is losing jobs instead of creating them.

In 2025, the U.S. economy has seen companies lay off at least 1.1 million workers. These workers are not just losing their wages, but there are not new jobs being created they can move into. In fact, the huge number of jobs lost equal those seen in past recessions.

Why are we not currently in a recession (with GDP in negative territory)? Because the rich are spending big - making up for the reduction in spending among most other Americans. In other words, the top 10% of earners is propping up the economy.

This is not sustainable. It means the bottom 90% of Americans are suffering like in a recession. They are finding it hard to buy the necessities required for a decent like in this country. Life is becoming unaffordable for the bulk of the U.S. population.

This has been slowly coming for the last four or five decades - since the GOP gained enough power in 1980 to impose their own economic policies. They imposed the trickle-down policy (which said that as the rich was given more they would share it with everyone else). But they didn't share it. They hogged the rising productivity and increased income, and now there is a bigger gap between the rich and everyone else than ever before (bigger than even in the 1920's right before the Great Depression).

This must change. We must make life affordable again for all Americans - not just the rich! But it won't happen as long as the Republicans remain in power with their failed economic policies.

Is Trump Intentionally Trying To Cause A Recession?

The following is just part of a post by former Labor Secretary Robert Reich: 

On Friday, Trump called on investors to buy low as markets plunged. “THIS IS A GREAT TIME TO GET RICH, RICHER THAN EVER BEFORE!!!” Trump said on Truth Social.

I don’t think Trump was referring to the current downdraft in stock prices. He was referring to the coming recession. 

Last week’s stock sell-off wiped out roughly $6.6 trillion in value from corporations listed on American stock exchanges. The clear message coming out of stocks, bonds, oil, and the dollar is the growing risk of a recession. 

On Friday, economists at JPMorgan, America’s largest bank by assets and market capitalization, put the odds of a coming recession at 60 percent. . . .

So a recession seems likely. The American economy will contract over the next six months. 

This will cause massive hardship for lower-income Americans because they’re likely to be the first ones to lose their jobs — at the same time they’re paying more for much of what they need. 

But a recession is not necessarily bad for Trump and his billionaire buddies. America’s oligarchy depends on periodic recessions. 

Recessions are opportunities to buy up real estate, companies, and shares of stock at bargain-basement prices. Recessions also give political cover to Trump, Musk, and Republican efforts to reduce labor and environmental standards.

Also, remember the business cycle. A recession early in Trump’s term is politically better for Trump and his Republican allies than a recession later in the term.

 

I believe Trump’s plan is for a recession in 2025 so that he and his billionaire buddies can ride the wave of a recovery in 2026 — just in time for the midterm elections.

Too Many Americans Don't Understand Economics

The chart above is from a Harris Poll done for The Guardian. It was done between May 10th and 12th of a nationwide sample of 2,119 U.S. adults. 

Sadly, it shows that a huge segment of the U.S. population doesn't seem to understand economics (and that misunderstanding crosses party lines). About 67% of Republicans, 53% of Independents, and 49% of Democrats say the United States is currently in the middle of a recession. IT IS NOT!

Just the opposite is happening - the economy is booming!

I understand that too many Americans are being squeezed by high prices and low wages. But your inability to keep up with the rising prices doesn't mean the country is in a recession. It means you wages are too low thanks to an unfair economy instituted and maintained by Republican officials.

Republican economic policy allows the rich to hog most of the rising productivity and corporations to price-gouge consumers. 

Don't blame President Biden and Democrats. They tried to raise the minimum wage, make it easier to unionize, help with childcare, and reduce poverty - but all those initiatives were killed by Republicans (who only want to keep funneling more money to the rich).

The country is not in a recession and inflation is coming down. But neither helps in an unfair economy. The economy needs to be fixed to benefit all Americans instead of just the rich. But that won't happen as long as Republicans have enough power to block all changes.

Bidenomics Success Has Killed GOP Whines About Economy

 Republican officials had hoped for a recession, but it did not come -- and without it, they are left with no economic message or agenda. Here's how Jennifer Rubin describes their dilemma in The Washington Post:

After hollering for more than two years about President Biden’s handling of the economy, Republicans have lost the recession issue. And, worse for them, they don’t have a coherent economic vision.

Even grouchy pundits concede that the economy is solid, suggesting the administration is “sticking the soft landing,” as the Wall Street Journal put it. (“Fresh economic data this week reinforced optimism that inflation can fall without the U.S. suffering a recession,” the Journal reported.) Gross domestic product, adjusted for inflation, rose at an annual rate of 2.4 percent in the second quarter. The Federal Reserveand many economists now do not expect a recession. To boot, inflation is abating.

“Employers spent 4.5% more on wages and benefits in April to June from a year earlier. … That marked a slowing from a 4.8% increase the prior quarter,” the Wall Street Journal reported. “The employment-cost index, a measure of compensation growth closely watched by Fed officials, also posted its smallest quarterly increase in two years.” Moreover, “the personal-consumption expenditures price index, the Fed’s preferred inflation measure, rose 3% in June from a year earlier … down from a 3.8% rise the prior month.”

For some time, Biden’s economic results have far outstripped the media’s portrayal of the economy and the public’s perception of it. However, as consumer confidence and GDP climb and inflation falls, perception and media reports might finally converge with reality.

And what is the GOP alternative? Republicans certainly did not practice fiscal sobriety or spending restraint under the previous administration. Indeed, defeated and indicted former president Donald Trump scolds Republicans for talking about entitlement cuts.

Republicans not only enacted a $2 trillion tax cut that opened a gusher of red ink, but they also spent like there was no tomorrow. The right-wing Manhattan Institute conceded, “When President Trump entered the Oval Office, CBO projected the cumulative 2017-2027 budget deficits would be $10.0 trillion. When he left office four years later, CBO’s projected deficits for the same period were $13.9 trillion.” In addition, “The president signed or enacted $7.8 trillion in new initiatives, the costs of which were partially offset by $3.9 trillion saved from economic growth revenues and technical re-estimates of taxes and spending levels.”

Republicans did not repeal Obamacare; it was too popular. They did not eliminate government departments, as they’d promised for years to do. Aside from some crank think-tankers and rich donors, there is no grass-roots political movement for less government or less spending. In none of his four presidential races has Trump run on small-government conservatism. Those who do get slaughtered in the primaries.

Moreover, GOP tax cuts that primarily benefited the rich made a mockery of any notion of “tax reform.” Republicans continued to make the tax code vastly more complicated, showering K Street lobbyists with special giveaways.

We’ve come a long way since Republicans preached fiscal restraint, limited government and free markets. Republicans now feed their special-interest donors, perpetuate crony capitalism and grow the debt.

Moreover, in the fury over niche culture-war issues, they’ve begun using government to punish corporate critics. Coupled with trade tariffs and anti-free-market restrictions on legal immigration, Republicans are more entranced with Viktor Orban’s style of strong-arm, crony capitalism than Adam Smith’s invisible hand of free markets.

Democrats have changed, too, thanks to Bidenomics. Tax increasesunder Biden and Obama were modest, rolling back a fraction of Republican predecessors’ cuts and exempting even the upper middle class. Meanwhile, in lieu of vast expansion of the social safety net, Biden adopted an industrial policy reliant on private industry to follow public investments. The result has been a bonanza of private investment, manufacturing and green energy development. Call it tempered capitalism or cooperative capitalism.

Republicans want to indulge their rich patrons, but Democrats seek to counter the gigantic power of Big Pharma (e.g., with modest cost controls on Medicare prescription drugs), Big Oil (e.g., by spurring investment in green energy) and China (e.g., the Chips legislation).

 

Republicans want to help tax cheats and expand the debt by hamstringing the IRS, and Democrats want to corral cheats and reduce the “revenue gap.”

Gone is the battle of Republicans’ free-market capitalism vs. tax-and-spend liberalism. A Republican Party devoted to cronyism and insistent on increasing economic inequality now faces a Democratic Party that modestly controls debt, spurs work (see the exceptionally high job participation among working-age people) and encourages private investment in forward-looking industries. So far, that has been a remarkably successful formula.

No wonder Republicans want to hyperventilate about Hunter Biden. They no longer have a recession — or an economic rationale.

Poll Shows Too Many Don't Understand Economic Issues

The chart above reflects the results of the recent Economist / YouGov Poll -- done between July 8th and 11th of a nationwide sample of 1,500 adults (including 1,296 registered voters). The margin of error for adults is 2.8 points, and for registered voters is 2.9 points. 

This is disappointing. About 47% of adults and 48% of registered voters believes the U.S. economy is currently in a recession. That is NOT true. The economy is actually doing very well.

There is still inflation (which has been coming down), but inflation does not mean there is a recession. In fact, there would be little to no inflation in a real recession. There would also be significant job losses in a recession, but the job picture remains strong and unemployment is very low.

Americans need to be taught economics. Sadly though, most high schools don't teach it at all, and many college degrees don't require it. This has resulted in economically ignorant adults (including voters) who just believe what lying politicians tell them.

Is The U.S. Headed For Recession? - What You Need To Know

 If you listen to the talking heads on cable news, you might think this country is headed for a recession. That may or may not be true. But here is what you need to know about it from former Labor Secretary Robert Reich:

1. Are we heading for a recession? Many signs point in that direction. New home construction slowed in April. Mortgage demand continues to decline. Some of the country’s largest and most influential retailers are reporting disappointing sales and profits. The stock market is nearly in bear territory. Futures markets are signaling trouble ahead. 

2. What exactly is a recession? “Recession” is a technical term, defined as two consecutive quarters of shrinking gross domestic product. The National Bureau of Economic Research is the authority that declares recessions in the U.S., and its own definition is “significant decline in economic activity that is spread across the economy and that lasts more than a few months.” As a practical matter, recessions mean fewer jobs and lower wages. 

3. When is a recession likely to happen — and should I panic? Don’t panic! If it occurs, it won’t be immediately. I’d guess some time over the next year. It’s a possibility that you ought to be aware of.

4.  Who gets most hurt by a recession? Lower-income Americans are especially vulnerable because they tend to be the first fired when the economy slows (and the last hired when it rebounds). Recessions also hurt younger people trying to get their footing in the job market. And they can be hard on retirees whose IRAs or 401(k) accounts get clobbered.

5.  Why are we heading toward a recession? Partly because of continued uncertainty from the coronavirus pandemic and Russia’s invasion of Ukraine. But if we fall into recession, the main cause will be interest-rate hikes by the Federal Reserve. The Fed has raised interest rates by 0.75 percentage points so far this year, and Fed officials are signaling more aggressive increases ahead — perhaps another half point in July and another half point in October. 

6. What’s the connection between Fed rate hikes and a recession? Rate hikes increase the costs of borrowing to individuals and consumers — which causes them to cut back on purchases of everything, including homes. This, in turn, causes the economy to slow.

7. Do Fed rate hikes always lead to recession? No. It’s possible we could have a “soft landing” that lowers inflation without causing a recession. But Fed rate hikes often over-shoot, resulting in recession — especially when they’re on the scale the Fed is contemplating. In 1981, for example, the Fed under Paul Volcker raised interest rates so high (to reverse double-digit inflation) it plunged the economy into deep recession. 

8. Why is the Fed doing this now? Because it believes it must slow the economy in order to slow inflation, which is at a 40-year high. 

9. Is the Fed correct? Slowing the economy will reduce inflationary pressures somewhat, but the Fed is operating under an old model of the economy — a time when inflation was driven largely by wage increases. The way to slow inflation then was to take the steam out of wage increases by reducing employment. Essentially, the Fed had to “draft” a certain number of workers into the fight against inflation by pulling them out of the labor force. That was when American workers had strong unions and it was difficult for companies to increase capacity by outsourcing abroad. These conditions no longer apply. Workers now have very little bargaining power relative to what they had thirty or forty years ago. Just look at the data: wages aren’t rising nearly as fast as prices. 

10. But if raising interest rates will reduce inflationary pressures somewhat, why shouldn’t the Fed at least try? Because raising rates as much as the Fed seems likely to do will cause more harm than good. Current inflationary forces are worldwide — coming from huge global pent-up demand following the worst of the pandemic, coupled with supply shortages around the world, which have been aggravated by Putin’s war. In fact, inflation in the U.S. isn’t nearly as bad as in most other advanced economies. Slowing the U.S. economy may put a dent in these forces, but not much of one. Yet the cost here — in terms of a recession or near recession, and loss of jobs and wages — is likely to be huge. 

11. Are there unique factors driving inflation in the United States? Yes. One of the biggest is coming from hugely-profitable corporations with significant market power, that are using inflation as a cover for raising their prices. (See my analyses here, here, and here.) Oil and gas giants, for example, are raking in record profits. In the first quarter of 2022, Chevron’s profits more than quadrupled from the first quarter of 2021, and ExxonMobil’s profits more than doubled despite taking a $3.4 billion hit for exiting its business in Russia. ExxonMobil will use its sky-high profits not to ease the burden on consumers at the gas pump, but to increase its stock buybacks. The oil giant now plans to buy back $30 billion of its own stock, up from the $10 billion it announced earlier this year. Note: The Fed’s rate hikes won’t stop this price gouging. 

12. What will stop them? Three things: (1) Vigorous antitrust enforcement that reduces their pricing power (even the threat of such enforcement will make them more reluctant to raise prices). (2) A windfall profits tax that takes away a portion of their recent profits (and redistributes them to consumers), as the Conservative government in Britain is doing. And (3) publicity: the government should shine light on highly-profitable corporations that are most flagrantly raising prices (such as Tyson Foods and ExxonMobil). 

13. So why doesn’t the Biden administration pursue these? It seems to be embarking on stronger antitrust enforcement, but it’s doing so very quietly — too quietly to get big profitable corporations to pull back from raising prices. Biden has begun shining the light on profitable companies that are raising prices. (Last Friday, he placed blame for rising prices on oil and shipping companies. In a speech at the Port of Los Angeles, when asked about Exxon’s profits, Biden said “Exxon made more money than God this year.”) But he and his administration seem strangely unwilling to criticize big corporations any more extensively than this. And they have not embraced or advocated a windfall profits tax. I don’t know why. It makes enormous sense economically. 

14. Speaking of politics, what’s the likely fallout if the nation succumbs to a recession? Bad news for Biden and the Democrats. Even though presidents and parties that control Congress don’t have much leverage over the economy, they get blamed for a bad one and get credit for a good one. Jimmy Carter and George H.W. Bush both lost reelection because of bad economies. 

15. Ugh. Precisely. Which is another reason why it’s important for Biden and the Democrats to be seen taking all the actions I mentioned above — and calling out corporations and CEOs that are using inflation as a cover for hiking prices.

Low-Wage Workers Hit The Hardest By Pandemic Recession

The charts above are from the Economic Policy Institute (EPI). They show that the industry impacted the most by the pandemic recession was the Leisure & Hospitality industry. And this industry hires a lot of low-wage workers (especially women and minorities) -- making those workers the hardest hit.

Here is part of what the EPI had to say:

In February 2021, a year into the pandemic recession, the U.S. economy remained down 9.5 million jobs from February 2020, the last month before the economic effect of COVID-19 began. Repairing employment levels requires more than regaining those 9.5 million lost jobs; we must also consider how many jobs would have been created since February 2020. During the 12 months prior to the pandemic recession, job growth averaged 202,000 new jobs per month. Absent the COVID-19-driven recession, an estimated 2.4 million additional jobs could have been created. Adding these to the actual job losses since February 2020 implies that the U.S. labor market in February 2021 was short 11.9 million jobs. . . .

• Between February 2020 and February 2021, employment losses were largest among workers in the leisure and hospitality, government, and education and health services industries. Even with a partial bounceback last summer after losing more than 8 million jobs last spring, the leisure and hospitality sector still faces the largest shortfall, with nearly 3.5 million fewer jobs in February 2021 than a year prior.
• Within the worst-hit sectors, workers in the lowest average wage and lowest average hour occupations were hit the worst and remain most damaged a year later. While aggregate output data (for example, gross domestic product) appears to have rebounded significantly by February 2021, the “output gap”—the difference between actual and potential economic output—that remains represents a far greater share of jobs because the still-jobless workers in the economy previously worked in some of the most disadvantaged sectors in terms of wages and weekly hours.
• Within the hardest-hit sector, leisure and hospitality, Black women, Hispanic women, and Asian Americans and Pacific Islanders (both men and women) saw disproportionate losses. Occupational segregation—the fact that these workers are less likely to be found in higher-paid management professions, even within leisure and hospitality—exposed them to the worst of the job losses.

Spending On Services/Activities Are Hurting The Economy

 

The chart above (found at Axios.com) shows the problem with our pandemic economy. It's not the sale of goods that's dragging down the economy. In fact, the sale of goods has actually increased. It's the sale of services and activities that are still suffering.

People have learned how to buy the goods they need in a pandemic economy. They go online or wear a mask on a short shopping trip.

Services and activities are different. They require exposure to large gatherings or prolonged exposure to other people -- things that are not safe to do in a pandemic.

This is why our economy will not recover until the pandemic is under control. People must feel safe before resuming the spending on services and activities.