Wayne O'Leary

Trump’s Sugar High

Once upon a time in America (the 1920s to be exact), there was a bigger-than-life character who fit the moment to a tee. Mary Louise Cecilia “Texas” Guinan, famed hostess of New York speakeasies that hid in plain sight during Prohibition, was the acknowledged queen of illicit Jazz Age nightlife. Bold and brassy, she left no doubt how she regarded her patrons, greeting them with a cheery, “Hello, sucker!”

Texas Guinan never met fellow cynic and con artist Donald Trump, but they would have gotten along famously, being equally adept at separating the gullible from their money. In the case of Trump, simply substitute “loser” for “sucker” and the essential attitude emerges, one the Donald has carried beyond Manhattan real-estate speculation into politics.

Operationally, the Trump technique is based on encouraging wishful thinking and selling the big lie, and nowhere has he applied it more thoroughly than in relation to the nation’s domestic economy. It helps that Trump’s America, like Guinan’s, is awash in corruption and dedicated to the aggrandizement of the self at the expense of the communal. If ever there was a time for a fleecing of the body politic, this seems to be it. And so the Donald is avidly at work stroking the national id — telling the more impressionable among us what they want to hear.

The big lie many Americans long to believe is that the economy, after a decade in the doldrums, is roaring back, and it’s all due to you know who. In July, celebrating some admittedly good (though hardly unprecedented) numbers on growth and employment, Trump proclaimed, “We’ve accomplished an economic turnaround of historic proportions. … Everywhere we look, we are seeing the effects of the American economic miracle.” Not only that, he tweeted around the same time, his economy was in all likelihood the best American economy ever seen.

The president hailed this year’s high second-quarter growth rate in the gross domestic product (4.2%), but ignored several quarterly GDP spikes of equal or greater magnitude during the Obama years, as well as those of the 1960s and early 1970s, when GDP averaged 5% per year. He rhapsodized about the low unemployment rate (under 4%), but neglected to mention it had been even lower during the post-World War II period. He took credit for a very pedestrian rise in average nominal wages (approaching 3% for the year), while ignoring the inflation rate that cancelled out all but 0.5% of it.

Still, half of Americans polled prior to the midterms accepted the conventional assessment that Trump’s economy was doing great, first because an uncritical mass media accommodatingly fixated for months on the rising stock market as a true measure of prosperity, and second because the White House followed the rule that a public lie, repeated often enough, eventually acquires the cachet of truth. And no one hammers home a bogus message with more insistence than our Donald.

The real truth is that what we’ve seen is fool’s gold; the economy, under Trump policies, is experiencing what can only be called a sugar high — a temporary upsurge stimulated by the narcotic of last year’s tax cuts. The transient benefits, moreover, are accruing to only a few. Sure, the unemployment rate has dropped, but it’s not the 1950s or 1960s, when low unemployment went hand in hand with decent, union-generated levels of pay in a country that was one-third unionized; nor is it a time when the federal minimum wage has actually kept pace with inflation, as was the case a generation ago.

Apparently, expectations have been lowered to the point where having a job — any job, paying anything — is acceptable. In fact, an estimated two-thirds of all jobs created in the Trump era pay in the range of $25,000 annually with minimal benefits. Unsurprisingly, then, a study by the think tank Third Way found, as of last October, that most US jobs (62%) don’t support a middle-class lifestyle; and a UBS Bank study earlier this year found a third of those in the bottom 60% of American income earners can’t afford to pay their bills and are financially stressed.

The chief beneficiaries of the Trump sugar high produced by the December 2017 tax reductions, which (until the year-end swoon) sent the stock market into the stratosphere, were those meant to benefit — the corporate shareholders, namely, America’s richest families who, Goldman Sachs estimates, will divide $1.3 trillion in the form of stock buybacks and dividends in 2018. These are the folks (the upper tenth) who own 84% of the value of all corporate stocks and 75% of the country’s total household wealth, according to NYU economist Edward Wolff and Deutsche Bank, respectively.

The ultimate grotesquery arising from the tax cuts was uncovered by nonprofit group Just Capital, which reported in November that average workers at 1,000 public companies it surveyed received all of $225 in one-time bonuses and salary increases for 2018, while virtually no tax savings went toward creating new employment. Meanwhile, in what is perhaps the height of irony, business-press coverage bemoaning this fall’s apparent waning of the sugar high in stock prices emphasized investor fears of possible wage increases impinging on the tax-cut-swollen corporate profits that have momentarily powered the Trump economy.

Alas, all sugar highs must come to an end. Economic forecasters already see signs of a dramatic slowdown as the corporate tax cuts wear off, leaving in their wake a mushrooming federal deficit ($113 billion additional for fiscal 2018 alone, a 17% increase). The year’s high second-quarter GDP, experts agree, was probably the peak for Trumpian growth, which is expected to gradually slump to 2% by 2020. The much-heralded explosion in long-term capital investment never materialized; instead, the tax-cut stimulus ($437 billion of it, including half of the corporate repatriation windfall) went toward further enriching stockholders.

That leaves the victims of this morality play, the hopefully optimistic consumers maxing out their credit cards and drawing down their savings in a misplaced belief in the myth of a great Trump economy, driving US household debt to a record $13.2 trillion in the process. There’s a rude awakening in store for them, as GM’s flimflammed auto workers can attest.

Somewhere, Texas Guinan is laughing.

Wayne O’Leary is a writer in Orono, Maine, specializing in political economy. He holds a doctorate in American history and is the author of two prizewinning books.

From The Progressive Populist, January 1-15, 2019

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