Why Did Trump Choose to be Such an Unpopular President?

William K. Black
February 25, 2019     Ames, Iowa

Donald Trump promised to deliver a middle-class tax cut of epic proportions.

“The largest tax reductions are for the middle class, who have been forgotten,” Trump said in Gettysburg, Pennsylvania, on Oct. 22, 2016.

If Trump had fulfilled that campaign promise, it would have made him spectacularly popular and vastly increased his support beyond his base.  He, not the ‘Republican Party,’ controlled the House and the Senate.  Many Democrats would have supported a serious cut in middle-class taxes.  Better yet, from Trump’s perspective, many Democrats like Nancy Pelosi and ‘Chuck’ Schumer would have bitterly opposed the Trump Tax Triumph on the economically illiterate basis that budget surpluses are next to godliness.

Trump could have followed up his tax cut success with a real infrastructure program distributed through grants to counties, cities, and states.  Again, this would have been spectacularly popular and even Pelosi and Schumer would have rushed to co-sponsor the legislation.  This would have been the second Trump triumph.  With those two triumphs, the Republicans would have won a whole series of close congressional elections in 2018, retained (and perhaps expanded) control of the House, and expanded control of the Senate.  That would have been the third Trump triumph and would have positioned him brilliantly for reelection.

I return now to expanding on the mystery of Trump’s refusal to enact a real tax cut for the middle class.  As Paul Krugman has emphasized, it is extraordinary for a President to give away trillions of dollars in tax reductions – and end up like Trump having his tax cuts prove massively unpopular.  Consider how easy it would have been for Trump’s Treasury Department to design the tax cut to expand his base and deepen his popularity with his base.  The average annual tax savings of the quintessential middle-class household with an income of $50,000 – $75,000 is a paltry $870.  Worse, the Trump corporate tax cuts are permanent, but the tax cuts for the middle class largely end in 2027.  By 2027, the net effect of the Trump tax plan for that same middle-class family would be a $30 tax increase.  Working class households would suffer slightly larger tax increases in 2027 than their middle-class counterparts.  Treasury, run by a plutocrat (Steven Mnuchin) for plutocrats, designed the Trump plan to give its benefits overwhelmingly to the plutocrats.  Mnuchin’s minions, drawn from the worst of Wall Street, ensured that the tax cut benefits would go overwhelmingly to the ultra-wealthy.

Trump could have created a real middle-class tax cut.  He could have used round numbers – every household with combined taxable income below $75,000 gets a Trump refund of $5,000.  If Trump wanted the refund more quickly, he could have given every household with taxable income below $75,000 the prior tax year an anticipatory refund of $5,000.  If he wanted to favor groups that made up his existing base, the Trump tax cuts could have been larger for farmers, blue-collar workers, or the elderly.  He could have denied tax cuts to those he viewed as likely to vote against him – the poor.  If Trump wanted to plug entrepreneurship, he could have created a $20,000 tax credit for anyone who started a new business during the tax year (or even in prior tax years).  These are merely examples designed to make the general point – it is easy to shape a massive middle-class tax cut certain to be spectacularly popular with broad segments of the population – including Democrats and Independents otherwise inclined to vote for the Democrats.

What would have such a real tax for the middle-class have done to the overall economy?  It would have stimulated the economy far more effectively than Trump’s tax giveaway to the plutocrats – and it would not have produced any harmful inflation.  The reason for the first point is that the working and middle class are far more likely to increase their consumption if given a lump sum tax cut of several thousand dollars.  That increases demand and business leaders respond by increasing production and capacity, which further stimulates demand.  The obvious question is “can this cause inflation in some circumstances?”  Yes, if the tax cut is so large relative to unused capacity that it creates a serious scarcity of real resources.  The Great Financial Crisis, however, so reduced labor force participation and growth that cuts the size of the Trump tax cut, even if given to the middle class instead of to the plutocrats, would not have been large enough to absorb our economy’s unusually large unused capacity.  Trump’s tax giveaway to his puppet masters (my wife’s apt phrase), predictably, did not lead to a record economic boom stimulated by a dramatic surge in investment in new plant, equipment, and research & development.  Instead, it produced an orgy of stock buybacks and massive raises for CEOs.

What would the public reaction have been to a real middle-class tax cut that stimulated the general economy far more effectively that Trump’s tax payoff to his puppet masters?  The public would have loved it and given Trump great credit for it.

The last sentence understates the scale of political benefits that would have come to Trump had he fulfilled his campaign promise to slash middle-class taxes.  It leaves out how much the so-called Democratic centrists’ opposition to such a tax cut would have added to Trump’s popularity while reducing support for Democrats in the 2018 congressional elections.  The ‘New Democrats’ and the House Democratic leadership are fervent supporters of “paygo” limitations on budget expenditures.  They are far to the right of Republican members of Congress on this issue.  More precisely, Republican members of Congress overwhelmingly pretend to care about budget deficits and federal debt only when the President is a Democrat.  ‘New Democrats,’ ‘Blue Dog’ Democrats, and Democrats who join “Problem Solvers” and other groups religiously oppose deficits even when increasing the deficit is the best economic action.  The result of the ‘centrist’ Democrats’ war against even desirable deficits is that they would have fought and died to oppose a real middle-class Trump tax cut.  They would have predicted that it would produce a disaster.  Their predictions about the grave and imminent peril of increasing the deficit, as always, would have proven false.  Trump would have emerged with his own popularity greatly expanded and enhanced as his greatest rival’s popularity greatly diminished.  The Republicans would have held the House, and possibly expanded their majority there and added to their Senate majority.

Trump would have demonstrated that he was the expert on the economy, taxes, and the deficit.  Pelosi would have demonstrated her recurrent failure to understand the economy, taxes, and the deficit.  She would likely have been defeated in 2018 in the Democratic vote for minority leader.  Pelosi is a skilled legislative leader, with terrible, closely related, blindspots on deficits and the urgency of dealing with climate change.  She acts as if we cannot afford to save the planet by acting decisively against global climate change now.  That view is horrific economics and public policy.  Similarly, she would have been at her worst in arguing that Trump was endangering the Nation by creating a real trillion-dollar middle-class tax cut.  She would have been the face of the Democratic Party in the 2018 elections – the woman and her Party that tried to keep your middle-class family from receiving a $5,000 tax cut.  When the economy reacted positively to the resultant stimulus, her humiliation, and that of her Party, would have been complete.

Given what Trump knows now about Pelosi’s skill in legislative infighting he should be able to weigh the “opportunity cost” of not using a real middle-class tax cut to maintain control of the House and to discredit and ultimately cause the Democrats to remove Pelosi from leadership.  Trump’s cowardly and corrupt surrender to his puppet masters on the tax cut and infrastructure allowed the Democrats to gain control of the House.  That made it possible for Pelosi to become Speaker again and to rain down the blows on Trump that have made his life miserable.

Trump’s refusal to deliver the great middle-class tax cut he promised (twice, in 2016 and 2018) has only two possible explanations.  One, he is spectacularly stupid.  Not mediocre, lazy, or nearly invincibly ignorant.  It takes spectacular stupidity to be unable to see, after months of meeting and press reactions, that the middle-class will love major middle-class tax cuts and hate tax cuts designed by Trump’s puppet masters to go overwhelmingly to the exceptionally wealthy.

Trump is the laziest, most corrupt, and most narcissistic President in U.S. history.  It is clear whenever he speaks that he is far from intelligent.  He is not, however, spectacularly stupid.  He is normal stupid.  He knew that a real middle-class tax cut would have made him spectacularly popular.

The other explanation for Trump’s breaking his tax promise to his base also explains his breaking his infrastructure promise.  In both cases, Trump has chosen the policy option that is worst for the American people – and for Trump’s popularity.  In both cases, Trump kowtows not to his base but to the wealthiest and most rapacious American elites.

Trump is spectacularly cheap.  He did not fund his presidential election and he was not remotely as wealthy as he claimed to be for decades.  He cannot borrow from any reputable bank in the world.  He is in office not due to a wave of small contributions from his base, but because he kissed the ring of a whole string of plutocrats who share two Trumpian traits.  They are sleaze and they are greedy.  They provided the funding to put Trump in office.  Their members and minions populate the horror show that is the Trump administration.  The plutocrats crafted the Trump tax cut to provide the astonishing transfer of wealth to the plutocrats.

The plutocrats knew that if Trump delivered a real middle-class tax cut and infrastructure program he would become spectacularly popular.  That would make him far more powerful and potentially independent from his plutocratic puppet masters.  A real middle class tax cut would have given tax relief overwhelmingly to the middle-class instead of the plutocrats.  The puppet masters hated that idea and killed it before it ever became a policy alternative in the Trump administration.

Similarly, a real infrastructure stimulus plan would have made regular Americans far better off, made Trump widely more popular, and driven bipartisan agreement.  Trump’s plutocratic puppet masters killed that option before it could become a policy alternative.  The result is a plan designed by and for the puppet masters.  Their predatory “partnerships” have the public provide the financing while the plutocrats skim the profits and dump the losses on the public.

We have run two real world tests of the relative power of Trump’s base versus his puppet masters.  In both tax cuts and infrastructure, Trump has shown slavish fealty to his puppet masters even when it harms and upsets his base and prevents tens of millions of other Americans from adding their support.

8 responses to “Why Did Trump Choose to be Such an Unpopular President?

  1. I, for one, am glad Herr Drumpf is as economically illiterate as he is, for now we have a good chance of ousting him in 2020 if not sooner, and replacing him with a real progressive. The damage he is causing in other areas (environment, courts, alliances, trade) more than offsets any benefits from a real middle class tax cut and infrastructure program.

  2. Minsky: infrastructure is resource creating. Large tax cuts for the middle and lower classes relative to unused capacity can be offset by capacity increases and productivity/efficiency improvements from well targeted infrastructure projects, quenching inflationary pressures. Working class tax cuts would go right to demand.

    Bill Black points out the essentials. Trump failed.

  3. The bigger picture is that a system of living based on consumption will never create enough livable wage paying jobs. We can however, create an industry that’s not based on consumption, will never have boom bust cycles and will move humanity forward. This industry is in place today but not to scale, it’s called NASA, JAXA, etc. Our current system of living is depleting the planet’s natural resources and in the end, we are stuck on a dead planet that we murdered. In other words, what as a civilization did we accomplish. My whole life I have listened to politicians talk about jobs. Why haven’t we solved this jobs problem? When will we as a society, as a civilization, develop objectives, milestones, and goals for civilization. For example, we can development a plan for a modern transportation that uses the latest technology and set milestones for when and what we want to accomplish. Let’s do something amazing together.

  4. ” Trump has shown slavish fealty to his puppet masters”

    Trump is a showman craving an audience, and revels in stealing scenes, but the whole Republican Party, with a good deal of DNC complicity, has been in service of plutocracy for several decades. Note that even President Obama surrounded himself with Wall St. conspirators, put the banks in charge of tradgicomic redress for the work-a-day victims of subprime shenanigans, and passed out get-out-of -jail-free cards to all the principle perpetrators. Scott Walker was panting like a hungry cocker spaniel when convinced by hoaxsters that he had received a phone call from one of the Kochs.

    The subtext here is the ancient struggle between our impulse to create an democratic egalitarian society, and our proclivity for supporting feudalism of one sort or another. I read that 12 US Presidents were at least at one time slaveholders. We decried the principle of subjugation and bondage, yet callously imposed it on others identifiable by skin tone as “different”, recreating the most reprehensible of feudal estates. “Robber Baron” plutocrats of the 19th Century created another version of feudalism, and the massive governmental cronyism and corruption that goes with it. After several decades in the 20th Century of forced plutocratic retreat (though never defeat) “Gilded Age” feudalism and corruption has come roaring back, with Trump as its champion.

  5. The entire System Of Governance here is CORRUPT. It’s a vaudeville. The rich win, no matter the brush strokes of paint used on the outside: orange, black, white, etc. For eg. Nancy Pelosi gave away a lot of concessions on ICE sting ops and funding for racist charities etc only to find “whoops!” Prez got all that, and THEN declared “Emergency” to get even more. This angle of which, as usual, un-reported among the TV media family circle. Is that stupid? No, the ssytem is rigged in favor of the real powers. This is a crappy show. It looks very democratic. The stench is too foul to cover up going back to a Biden way of doing things, or a Clinton-esque. Even Bernie would “have to” engage a coup in Venezuela, no question about it. What democracy? What independent press? What debates? IT’s a joke.

  6. So the president’s former fixer claims that Trump never wanted/expected to be president; it was just one more of his scams. Who knows, but I had an inkling of that in video from the immediate aftermath of his victory. He looked perplexed, almost pensive. Silly me, I thought he might be facing up to the immense gravity of his new responsibilities (and silly me again, I took comfort in thought that the Republican Party would have at least some interest to remind him of those responsibilities, rather than run riot, like a frat house that had hijacked a beer truck). If that is so, it provides further insight into why Trump seems to govern as if there is no tomorrow, on the basis of what pleases his “gut” and whim.

  7. Tadit Anderson

    In appreciation to Michael Hudson, the nominal US has a long history of support for neo-feudalism, which has only infrequently been identified as such, “rentier” is one nugget from moral philosophy. In large part the early history the nominal “revolution” was more of a counter revolution than not. The point that there were three counter “revolutions” within a relatively short period of time has never been associated with the point that the small scale farmers were largely oppressed by the neo-feudalism of rentiers and the effects of slavery. Debt slavery has not reached the level of recognition as a class dividing feature. There were early on three rebellions which have not been contextualized to point out the neo-feudalism, and further there was an active debt de facto conscription process where signing onto the rentier revolution was better than starving. The point here is that there was a quite difference in agenda between the rank and file infantry and the neo-feudal elite on this side of the pond. The Pendergast Rent Rebellion in the Hudson Valley happened about 10 years before the opportunism related to the declaration of independence. Shays Rebellion was also a result of resistance to the usury of absentee rentiers in western Massachusetts. The nominal Whiskey Rebellion was also a result of neo-feudalism wherein what currency was available in western Pa. was drained in rent payments to absentee rentier landlords, George Washington being one of the more notorious. Whiskey had come to be used as a currency to pay local debts, it being relatively non-perishable and the conversion to a barter currency allowed the rent paying tenant farmers to not have to ship their grain harvest over the Allegheny Mountains to the eastern coastal grain market. Note as well the details of Hamilton’s very first taxation policy the “Spirits Tax” whereby he allowed the coastal spirits producers to self report their production, and sent in tax collectors into western Pa. The final “cure” to the tax/rentier rebellion was effectively erased by the spending by Hamilton to feed and supply the “watermelon” army of the unemployed from the eastern coastal area, led with the grand pomp of George Washington who was also a major rentier land owner in the region. GW by the way first gained his “military” legacy in part by rushing into the region as a surveyor/land grabber at the end of the nominal French and Indian War, and then becoming an absentee neo-feudal rentier land owner. Another small piece is that the whole sortie crossing the Chesapeake Bay to York Town was far more of a political fiction exploited by Alexander Hamilton et al. The Hessian mercenaries hadn’t been resupplied or paid in months due to the blockade of the northern colonies by the French Navy. Effectively, just as the Federalization of the American colonial confederation, made the colonies a federation to sustain chattel slavery against the growing abolition movement and the Somerset Court decision in 1772, the interests of neo-feudal land ownership by rentiers residing in the former “colonies.” Then also the fanfare related to the nominal Declaration of Independence was a hijacking of that movement in favor of rentier economics. It was blunt example of plaigarism of about 70 similar declarations in that period, and really an act of positioning. The nominal Constitutional Convention was also a piece of political positioning, which included holding that convention during fall harvest time to limit the number of small scale farmers from participating. Further is the process and results of what has been described as the Compromise of 1792 which was accomplished outside of public discourse and included the establishment of the first bank of the US and the bond speculators who were rewarded for their usury It also included GW being indirectly rewarded again for his claim to the swampland which was a major area of refuge for slaves escaped from the largest slave market in the region at Alexandria. Again, the victims of colonial usury are deeply under represented and the neo-feudal elite massively benefited by the toil of others. So much for the burying of a non-fictional narration of neo-feudal/rentier history and those who exploited all who were in their way.

  8. Prairie Bear

    A great article as usual, expertly laying out the particulars of the situation and what might have happened had Trump been acting rationally as we would understand it. However, I think there is an assumption implicit here that might help explain the mysteriousness of POTUS’s actions in this case. I know it’s going to make me sound like a “conspiracy theorist,” but bear with me and I will try to be brief.

    There is a common, almost universal, and not at all unreasonable assumption that politicians are always “in it to win it.” That is, they want to be elected, and if already in office, to be reelected. This may not be the case. I recently read Indispensable Enemies by Walter Karp. He basically says that the Democrats and Republicans have been in collusion (yes, that word, but he was using it 30 years ago), not necessarily to keep their officeholders in power, but to maintain the control and power of the elites running the party organizations. This has been going on, he says, at least since the Civil War.

    It sounds farfetched, and as cynical as I am about politics, it shocked even me when he made this assertion early in the book. But he meticulously traces out example after example of how the actions of Presidents, Congresses, governors and state legislatures just didn’t make sense, given majorities they had at the time and the desires of the population. Trump may simply not care if he or the GOP wins the next election, or he may have actual reasons for not wanting to.