President Donald Trump campaigned like a populist, but he is governing as a plutocrat whose policies will exacerbate the growing inequality in American society.
If the House and Senate reconcile their differences, Trump will score his first legislative victory with the passage of a $1.5 trillion tax package that primarily benefits corporations and the wealthy. Businesses will see their top corporate rate slashed from 35 percent to 20 percent (though the rate may vary a bit in the final measure); really big businesses, like Apple and Microsoft, get to bring back to the United States the piles of cash stashed in offshore accounts at a low tax rate (probably around 14.5 percent); and corporations can deduct the cost of new investments for the next five years. And, perhaps the biggest boon for big business is the that companies will no longer have to report to the IRS income earned overseas.
Investors in the stock market will benefit since all that cash businesses bring back to the United States will be pumped into higher dividends and stock buybacks, which increases stock prices. And, tax cuts mean larger profits for corporations, which means more money in the pockets of investors. The Republican argument that tax cuts pay for themselves because businesses and the wealthy invest in the economy, thus creating jobs, is a fallacy. The winners in the GOP tax bill are those with inherited wealth (the estate tax may go away) and investors. It is a measure any plutocrat would love.
The bill’s likely failure to pay for itself will balloon the national debt, giving impetus to the Republican argument that spending on the social safety net — Social Security, Medicare, and Medicaid — needs to be cut. Trump campaigned promising not to cut Social Security and Medicare, but has given little indication that he will honor that vow. Cuts to entitlements — as well as anti-poverty and healthcare programs — disproportionately harm Trump’s core bloc of lower-income supporters. Similarly, many Trump voters will be adversely affected if the Senate proposal to eliminate the individual mandate in Obamacare survives the conference committee.
Though Trump has no legislative victories, he has benefited the wealthy and the powerful by rolling back scores of Democratic policies on energy and the environment. Recently, Trump cut two of Utah’s national monuments — established by Presidents Clinton and Obama — to a fraction of their previous size, opening vast tracts of land to exploration for oil and gas reserves and precious minerals. More protected lands are on the chopping block. Two Trump appointees — Ryan Zinke at the Interior Department and Scott Pruitt at the Environmental Protection Agency — have used and intend to continue using their offices to further exploitation of the nation’s natural resources. The Trump administration approved construction of the Keystone XL and Dakota Access pipelines.
Trump’s Cabinet looks like the boardroom at Goldman Sachs. That is an exaggeration, of course, but Treasury Secretary Steven Mnuchin worked at Goldman, as did Gary Cohn of the National Economic Council. Other Goldman alumni include the head fo the Securities and Exchange Commission (is that the equivalent of the fox guarding the henhouse?) and Stephen Bannon, formerly Trump’s chief strategist. Other administration members hail from big business, including Rex Tillerson, who ran ExxonMobil before becoming secretary of state. The swamp has not been drained. Rather, it has been filled with the well-heeled.
Few of Trump’s populist promises survived Inauguration Day. The president has failed to label China a currency manipulator and has not imposed tariffs on imported Chinese goods. Trump did pull out of the pending Trans-Pacific Partnership — one of many trade agreements he promised to end — but he has not made changes to the North American Free Trade Agreement. His promise to spend hundreds of millions of dollars on infrastructure projects has not been fulfilled.
Trumpistas fell for a classic bait-and-switch, in this case voting for a candidate they believed was a populist only to wind up with a friend of the plutocracy (never mind that Trumpistas should have realized from the beginning that Trump IS a member of the plutocracy). As conservative magazine editor Bill Kristol put it, “It looks more like he’s doing favors for his buddies in the business world.”
The upshot of Trump’s plutocratic governance will be increasing inequality in American society. Trump, of course, cannot be blamed for the vast disparity in wealth afflicting the United States, which has been increasing for decades. But, his policies will exacerbate the historic trend. A new paper by economist Edward Wolff shows that more and more wealth has been concentrated in fewer and fewer hands over the last five decades. Today, the wealthiest one percent of American households own 40 percent of the country’s wealth. The top one percent of households now own more wealth than the bottom 90 percent of Americans combined.
Wealth — often defined as net worth — is how much people own. Wealth is the value of assets minus debts, and it not the same as income. In the United States, the distribution of wealth is more skewed than the distribution of income. The perhaps soon-to-be passed tax bill — the one that will give Trump his first legislative victory — favors the owners of wealth over income earners and will further inequality.
It all adds up to a government of the plutocrats, by the plutocrats, and for the plutocrats. As for populism, talk is cheap.