There are clear signs of slowdown in the US economy – despite the enormous Trump tax cuts that were supposed to add rocket fuel to the economy.
Michael Burke Writes for The People's Assembly
In the autumn of 2018 US industrial production was rising at an annual rate over 5%. It has since slowed to under 1% annual growth and fell in the most recent month. On the broader measure of GDP, Trump was boasting that this time last year that the economy was growing at a rate above 4%. But in the three quarters since growth has averaged just 2.9%. Worse, while the economy has grown by $400 billion over those last three quarters, $315 billion of that is accounted for by firms’ rising stock of unsold goods, or inventories. At some point, those firms will cut back on production if goods remained sold.
This resumed long-term slowdown of the US economy would not be as important, except for the fact that the Trump Administration is mounting an all-round trade offensive and threatens to make even deeper tax cuts. In different ways, both of these are a threat to living standards in the US and internationally.
Currently, there is a vast list of countries where the US has imposed punitive sanctions. Respected economists have estimated that 40,000 people have died in Venezuela alone because of US sanctions. This is economic warfare, and has been closely linked to actual wars of regime change. Now the latest countries in US’ sights are Iran and China.
Less well understood is that these sanctions are an attempt to hobble other countries, while tariffs impose lower living standards on the ordinary population of the US, workers and the poor, who are obliged to pay higher prices for often inferior goods. Contrary to Trump mythology, the targeted countries do not pay the tariffs. US consumers and companies do. And the sanctions and tariffs don’t create jobs in the US. At most, they may force some production from one country to another, but almost never force it back to the US.
In a different way, Trump’s reckless tax policy represents a threat to ordinary living standards in the US and internationally. The US runs a large deficit with the rest of the world, in part funding its government deficit. It is sucking capital in from overseas that could otherwise be used for investment there, or for consumption. Excessive consumption in the US means that its per capita consumption of fossil fuels is greater than anywhere else on the planet.
But these deficits are unsustainable. Like Reagan before him, Trump will ‘discover’ that tax cuts haven’t ‘trickled down’ and haven’t led to surging growth. Cutting taxes for business and the rich will just lead to even higher deficits. There will be then be a hue and cry that Government spending must be cut. Of course military spending will be exempt. But anything that provides even a minimal safety net for the population will come under threat.
Trumponomics is a threat to all humanity, including the bulk of the US population. All his policies are in the interests of big business and the super-rich. There are many reasons to oppose Trump, and his economic policy is among them.
Dump Trump - Stop Farage Public Rally - See Facebook Event here
Come along tonight, Thursday 30 May, 6:30pm at The Indian YMCA, 41 Fitzroy Square, W1T 6AQ, London.
Join the discussion and listen to some of best speakers on the left on building an alternative to the far right,
Laura Pidcock MP
Liam Young - Writer
Owen Jones - Journalist
John Rees - Political Commentator and Author
Myriam Kane - NUS Executive
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