Why Trump’s Feverish Doom-Talk Makes Literally Zero Sense

The GOP frontrunner is lying to his fans about the state of the economy, something Obama pointed out in his State of the Union address.

Source: AlterNet

Author:Bob Cesca/Salon

Emphasis Mine

The Republicans, and especially the frontrunners for the GOP nomination, really want the economy to suck.  After all, if the economy is strong then all of Donald Trump’s demagoguing about “making America great again” begins to feel a tad unnecessary.

During his final State of the Union address, President Obama made sure to hammer the Republicans on this very point. Said Obama: “The United States of America, right now, has the strongest, most durable economy in the world.” Also: “Anyone claiming that America’s economy is in decline is peddling fiction.”

That second one is especially accurate, as illustrated by a sampling of quotes from one of the recent Republican presidential debates:

Ted Cruz: “From 2008 to today, our economy has grown 1.2 percent a year on average. The Obama economy is a disaster…”

Marco Rubio: “I mean, this economy is nothing like what it was like five years ago, not to mention 15 or 20 years ago.”

Jeb Bush: “My worry is that the real economy has been hurt by the vast overreach of the Obama administration.”

And then there’s serial fiction-peddler Donald Trump, who told CNN:

“We have to take our country back. We’ve lost our jobs, we’ve lost our money. We’re a third world nation and we’re a debtor nation at the same time, you need somebody with the kind of thinking — I built a great company. I have some of the great assets of the world. And I talk about only form- not bragging- I talk about it because that’s the kind of mentality that this country needs. We need that mentality now and we need it fast.”

Plus:

“A lot of people up there can’t get jobs. They can’t get jobs. Because there are no jobs.”

And:

“Last quarter, it was just announced, our gross domestic product -– a sign of strength, right? But not for us. It was below zero. Who ever heard of this? It’s never below zero.” Before we continue, let’s correct the record about, “It’s never below zero.” Whopper lie. Economic growth has dipped below zero many, many times! 42 times since 1946. But Trump is counting on his supporters not paying very close attention to such things.

Finally, here’s Trump on the labor participation rate:

“I saw a chart the other day, our real unemployment — because you have ninety million people that aren’t working. Ninety-three million to be exact.”

It’s all fiction. The reason we know this is because numbers don’t lie. But Trump and the Republicans clearly do.

Let’s take a look by starting with that last quote first, regarding the labor participation rate, which Trump was hamfistedly referencing here. This is an often cited statistic that Obama critics like to wheel out in order to undermine the reality that unemployment has been cut in half under Obama, from more than 10 percent to exactly five percent today. The participation rate measures the number of people who’ve dropped out of the workforce, and the Republicans suggest it’s because they simply can’t find work in Obama’s allegedly disastrous economy.

They’re lying.

Here’s the truth. The labor participation rate has indeed dropped under Obama. Bad news, right? Well, only if you believe what Trump says, and why the hell would you do that? Yes, the number has descended from 65.7 in 2009 to 62 percent today. But let’s suppose it was a larger five percent drop, or a 10 percent drop. Does it matter in terms of evaluating the Obama economy? Not a chance.

FactCheck.org released the site’s most recent scorecard for the Obama’s presidency and noted the following on the labor participation rate:

Contrary to many of Obama’s critics, however, that decline is due mostly to factors outside the control of any president — factors such as the post-World War II baby boomers reaching retirement age. Survey data published by the Bureau of Labor Statistics in December show that those outside the labor force in 2014 said their reasons for not working were retirement (44 percent), illness or disability (19 percent), school attendance (18 percent) or home responsibilities (15 percent). Only 3 percent said they couldn’t find a job, or gave some other reason.

So, sure, Trump might be able to blame three percent of a total 3.7 percent decline in the rate as maybe Obama’s fault. But most of the workers who’ve dropped out of the labor force have done so for reasons other than the state of the economy. Do the math.

Along those lines, Trump also said the “real” unemployment rate is 42 percent with 93 million workers unable to find a job. Again, fiction.

Per the Washington Post:

Trump may have seen a chart, but he misread it. Yes, the BLS shows that there are 93.7 million people “not in the work force,” but the vast majority of those people do not want to work. Most are retired or simply are not interested in working, such as stay-at-home parents.

Here’s more bad news for the Republicans. According to FactCheck.org, the Obama economy has added 9.2 million jobs. For the sake of reference, the Reagan economy added 16 million jobs, but job growth during Obama’s second term, which was more or less untethered from the Great Recession, exceeded Reagan’s first term job growth. Furthermore, the unemployment rate under Obama has declined more rapidly to a lower level than the rate under Reagan. Either way, it’s not the unmitigated disaster Trump’s talking about by any stretch of his bewigged imagination.

Elsewhere, per FactCheck.org, since the beginning of his first term when he inherited an economy strangled by an nearly unprecedented recession, the Obama economy has seen the number of long-term unemployed drop by 614,000 workers. Job openings are up 97 percent. The S&P has grown by 139 percent. Weekly earnings are up (though not up enough, admittedly). Crude oil production is up 87 percent and oil imports are down by 62 percent. Alternative energy sources are up by 273 percent. Exports are up by 31 percent. The number of uninsured Americans has dropped by 15 million, due mainly to the dreaded Obamacare. And federal spending is only up by 11 percent, the lowest rate climb of any modern president. The budget deficit has dropped by more than a trillion dollars. And the economy has grown for 79 consecutive months.

Is everything perfect? No way. But, again, we’re only a few years out from an economic disaster of biblical proportions, and it would’ve been foolish to expect rapid economic growth in the wake of a recession that nearly crushed the world economy.

Just as foolish would be to expect that Donald Trump could do any better. Mark Zandi of Moody’s Analytics observed this week,

“If Trump’s policies were enacted it would be some form of disaster for the economy. If you force 11 million undocumented immigrants to leave in a year, you would be looking at a depression. It would not help the people he is talking to, they would be the first to go down.”

That’s reality. And yet too many Americans think he’s going to “make America great again.”

See:http://www.alternet.org/election-2016/why-trumps-feverish-doom-talk-makes-literally-zero-sense

We Still Need Higher Revenues to Reduce Our Deficit

From: American Progress

By Michael Linden and John Craig

“Though conservatives like to point to the “historical average” level of tax revenue as support for their position that further deficit reduction should not include more revenue, the historical data actually prove just the opposite. If we want to reduce our budget deficit, we will need higher revenues than are currently projected.

As Congress and the White House contemplate possible approaches to deficit reduction that would replace the $1.2 trillion sequester that is set to begin in March, the arguments over revenue and spending levels have intensified. Most conservatives in Congress insist that any plan to replace the sequester must be paid for entirely by cutting spending—not by bringing in new revenue. Their position rests on the contention that, “This isn’t a tax problem. It is a spending problem.” And as proof, they often point out that revenues are already projected to rise above the historical average over the next 10 years.

They’re not wrong—at least not about the historical average. Federal receipts, as a percentage of gross domestic product, or GDP, have averaged 17.9 percent over the last 40 years. The Congressional Budget Office projects that—with the fiscal cliff deal in place and assuming that a variety of “temporary” tax breaks will be extended yet again—federal revenues will average 18.5 percent of GDP over the next 10 years. 18.5 percent is certainly bigger than 17.9 percent, so some conservatives say that this proves that we don’t need more revenue.

But what they’re missing is that 17.9 percent of GDP hasn’t been enough revenue for the last 40 years—and it certainly won’t be enough for the next 40 years. Remember, the federal budget was in the red for nearly every one of these last 40 years—and often deeply so. And the deficits were bigger when revenue was lower, smaller when revenue was higher—a fact that should surprise no one.

Take, for example, the last four years. From 2009 to 2012 federal receipts averaged just 15.4 percent of GDP—lower than at any point since 1950. Not surprisingly, record-low revenues translated into record-high deficits.

This basic relationship holds true over the past four decades. In the 40 years since 1973, 11 years saw deficits greater than 4 percent of GDP. In those same 11 years, revenues averaged 16.7 percent of GDP—well below the much-vaunted historical average. Similarly, there were 12 years in which the deficit was smaller than 2 percent of GDP. And in those years, revenue averaged 18.9 percent of GDP—much higher than the average. And, of course, in the four years in which we actually balanced the budget, revenue averaged 20 percent of GDP. (see Figure 1)

But full budget balance isn’t necessarily what we’re aiming for right now, so perhaps revenues don’t need to be increased all the way up to 20 percent of GDP. Indeed, President Obama has called for just enough deficit reduction to prevent the national debt, measured as a share of GDP, from rising. Others have called for somewhat more deficit reduction. Those goals will require deficits in the range of 2.5 percent of GDP or lower. And in the years since 1973—when the deficit was less than or equal to 2.5 percent of GDP—the federal government collected 18.8 percent of GDP on average in revenue.

While the difference between 18.8 percent and the current projection of 18.5 percent may not appear to be substantial, that 0.3 percent increase over the next 10 years equates to about $640 billion in additional revenue. To put that in perspective, the president’s call to replace the sequester half with revenues and half with spending cuts would equate to about $500 billion in new revenue. That would still leave us short of the “historical average” for years with low deficits.

And let’s not forget that what was sufficient in the past may not be sufficient in the future—a point which the historical data itself proves. In the years between 1953 and 1983 in which the deficit was smaller than 2 percent of GDP, revenues averaged 17.9 percent of GDP. But during the following three decades, in the years in which the deficit was smaller than 2 percent of GDP, revenues averaged a much-higher 19.1 percent. Our needs grew over time as our demographic, economic, and security challenges changed, so revenues that were sufficient in one generation became insufficient in the next. (see Figure 2)

This is especially true right now. The anticipated demographic shift as a result of the “baby boom” generation retiring means that there will be a larger proportion of the population relying on Social Security and Medicare in the coming years. Even with significant changes to these programs, this will mean higher costs to the federal government. If we want smaller budget deficits in the future, revenues must be higher than they have been in the past.

Yes, revenues are currently projected to rise above the historical average—but this misleading factoid proves little. Rather than showing why we don’t need more revenue, the historical data actually show clearly why we do. When deficits were small in past years, revenues were higher—higher than the historical average and higher than the current projections. Not only that, but the average revenue in low-deficit years has increased over time.

The lesson is clear and simple: If we want to reduce the deficit, we’re going to need more revenue.

Michael Linden is the Director for Tax and Budget Policy at the Center for American Progress. John Craig is a Research Assistant in the Economic Policy department at the Center.

Emphasis Mine

see:http://www.americanprogress.org/issues/budget/news/2013/02/20/53961/we-still-need-higher-revenues-to-reduce-our-deficit/