President Donald Trump has recently been touting his political achievements, proclaiming that during his time as president, the economy has never been stronger. In its annual economic report, however, the White House indicated that the uncertainty caused by trade war has affected business investment. And unfortunately, economic growth this year will have a hard time reaching 3%.
Last month, in a speech at the World Economic Forum in Switzerland, Trump praised the strength of America’s economy. He pointed to the economic prosperity of blue collar workers, the resurrection of the American dream and those who are benefiting the most — the middle class. Early this month in his State of the Union address to Congress, Trump bragged how deregulation and tax cuts caused unprecedented success in the U.S. economy. However, the hollowness of his boasting was quickly exposed.
Joseph Stiglitz, recipient of the Nobel Memorial Prize in Economic Sciences, said that leaders in the business world often care about gross domestic product growth rates and new highs in the market — two indicators that are not good at representing economic performance. These two indicators cannot reflect whether people’s living standards have risen or fallen, nor do they consider sustainable development. Stiglitz believes that only when people are healthy will the economy be healthy. Unfortunately, during Trump’s time in office, the average life expectancy of Americans has fallen yearly. The mortality rate in 2017 was the highest it has been since World War II, mainly because Trump overturned the Affordable Care Act, causing millions of people to lose their health insurance.
Stiglitz criticized the fact that the tax cuts Trump is so proud of primarily profit the ultrarich and the business world, yet increase the tax burden on the middle and lower classes. The median salary of male workers with full-time jobs is 3% less than what it was 40 years ago, indicating that stagnating wages remain a serious problem. Even worse, Trump has greatly relaxed pollution regulations for businesses, which has increased air and water pollution and accelerated climate warming. Furthermore, loss of life and property due to extreme weather events has reached a record high, accounting for 1.5% of the GDP in 2017.
Trump once said that he wanted GDP growth to be higher than 3%, but last year in the U.S., it was well below that at only 2.3%. Stiglitz indicated that tax cuts during Trump’s presidency have caused the federal deficit to exceed $1 trillion. Moreover, the GDP growth under Trump is lower than that during President Barack Obama’s second term. Obviously, Trump has failed to follow through on his political platform.
Paul Krugman, another recipient of the Nobel Memorial Prize in Economic Sciences, pointed out that all of Trump’s actions since taking office have gone against promises he made earlier, and he is robbing the poor to help the rich. Trump’s tax cuts for the wealthy and corporations have caused the federal deficit to soar, while overturning national health insurance has made life more difficult for vulnerable populations.
Although Trump was the one to set off the U.S.-China trade war, American companies have suffered. Krugman indicated that even though Trump announced he wanted corporations to return investment to the U.S., which would increase employment, the tariff barriers the U.S. and China have set up against one another have caused the cost of imports into the U.S. to increase, which consequently has reduced the number of workers hired. As a result of the trade war, the U.S. has not gotten a better deal, nor have manufacturing job opportunities increased.
Regarding the coronavirus outbreak in China, Krugman estimates that the new coronavirus might not necessarily take lives, but it may take jobs. The reason for this is that, as a result of globalization, China has already become the factory and market for the whole world. China accounts for more than one-fourth of the world’s manufacturing. With global supply chains so closely connected, whether it’s tariffs or the virus, both have significantly increased business costs, and uncertainty has reduced business investment.
The impact of the coronavirus on industry is like that of another trade war, and people have not yet found a cure for the virus. The formidable power of the trade war plus the virus should not be underestimated. The corona virus is causing disruptions and inflicting losses for American companies, which is creating many uncertainties along Trump’s path to reelection.