The Donald Trump Economy Will not Benefit the Lower Class

Introduction to the Trump Plan

In his famous Labor Day speech in 1971, President Richard Nixon stated, “Our success in rising to the challenge of peace will depend on the competitive spirit of the American people. On this Labor Day, 1971, I am confident that this spirit is strong and healthy among America’s 80 million wage earners” (Nixon, n.d.). The realization of this dream has been the driving force for the American people, including the lower- and the middle-class citizens. In the latest political tide, Donald Trump would talk about the administration being for all and instating that all that was needed was the right president with the right priorities. “It’s about time we had somebody running this country who knows a little something about money,” claimed Donald Trump himself at the first presidential debate in 2016 (Leonhardt, 2016). Later, to the dismay of many, he won the hotly contested elections and was sworn in in 2017 as the 45th President of the United States. However, there are two sides to the debate regarding the future of the nation under Donald Trump considering the balance of wealth in meeting market demands.

The foreign minister of Luxembourg criticized Trump by saying he was “dividing the Muslim world” (Robins-Early et al., 2017). The former leader of the Soviet Union, Mikhail Gorbachev, in reaction to Trump’s victory, claimed that the worst is yet to come and that the world should prepare for war (Robins-Early et al., 2017). On the other hand, there are voters who supported Trump in the election, and they advance one main justification for their choice. They consider that Donald Trump is a wealthy, successful businessman. In fact, Donald Trump is so successful that he was ranked #2 on Forbes’ “The World’s Most Powerful People 2016 List” (Ewalt, 2016). Trump’s supporter George Erdner from Duluth, GA, defends his choice, “It was time we had a businessman with strong executive skills leading our nation back to capitalism” (Fishwick, 2016). The allure of having a strong businessman for president creates a mystique of hope for the United States; however, leading the nation back to capitalism as per Trump’s plan can actually end up adversely, thus affecting the proletarian class. Although the allure of having a businessman as president creates a mystique of hope for the United States, the analysis of the economic plan proves that the scheme only benefits the upper class, whereas in some cases it can even adversely affect the lower level citizens.

Building a Wall along the US/Mexican Border

It is imperative to consider the understanding of the economics of Donald Trump’s plan for the wall that is underway and that is expected to be erected at the Southern border between Mexico and the United States. Trump had cited that the necessity of building a wall is to ensure that the “supposedly bad” Mexicans, who he perceives to be criminal and who engage in illegal businesses within the US, are prevented from causing harm (Francis, 2016). It was only five days into his presidency, and Trump had already signed an executive to mandate the construction of the supposedly controversial wall that has gotten economists concerned already. What the president fails to realize, however, is that putting a wall along the border would mean Americans end up paying, especially now that Mexicans have stated explicitly that they will not pay for the wall.

The understanding of the role of Americans in paying for the wall is clear. Since there are more proletarians than the upper-class citizens, proletarians tend to pay more (Thompson, 2016; Smith, 2005). Interestingly, Trump wants to impose the cost of the wall on Mexico, and despite Mexico declining to pay, Donald Trump has not changed his mind about the idea. The outcome is that it leaves America to pay for the project, and since its population is not principally composed of the upper-class individuals, the lower-class citizens will be the targeted group.

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The Trump Administration further fails to consider that building this wall would means upsetting trade relations between America and Mexico. Apparently, by the time Donald Trump was finishing his first week in office, he had already alienated a friendly neighbor with whom the US has had strong relations and arguably the largest trade partner (Francis, 2016). The effect is clear because by attacking Mexico but suggesting that they should pay for the wall, he does not pre-condition a negotiation but undo the many years of diplomacy between the two countries (Guajardo, 2017).

Trump has, therefore, recklessly brought back the dark era into the US-Mexico relations, and the outcome is made worse from the realization that Americas will suffer in the process. The people who will ultimately pay are not Mexicans; they are the US. customers who are currently getting a great deal on their products (Francis, 2016). The implication is that people who buy goods from Mexico could end up paying for the wall indirectly if the US retaliates against Mexico for their refusal to pay with an embargo. Also, Mexico would raise tariffs on the US goods, which means that the lower-class people would not get to sell their goods to Mexico.

Increased Defense Budget

The first part of the Trump plan is to increase defense spending. In a letter to Congress attached to the budget, Mr. Trump asserted, “The core of my first budget blueprint is the rebuilding of our nation’s military without adding to our federal deficit” (Cohen, 2017). At this point, one would question where the money to increase military power will be obtained, considering whether the deficit is off-limits. For a logical point of view, one would think that it would come from the government cutting on the spending within the United States. However, throughout his campaign, Donald Trump had emphasized preserving the budget for the elderly (Thompson, 2016). The effect is the federal assistance programs are likely to be affected, suffering near-paralyzing budget cuts if Trump was to go through with his plan (Thompson, 2016).

It is clear, therefore, that bulldozing these programs could impose devastating effects for the lower class. The implications would be disastrous for the taxpayers because food stamps would be cut, federal unemployment insurance would plummet, and the Department of Education’s budget would also see a significant drop (Thompson, 2016). These landslides in funding are not only limited to these programs; so, the hypothetical effects can span even wider. The increased defense spending would ultimately adversely affect the proletarian class. The programs from which Trump would cut money in order to increase the defense budget are heavily relied upon by the lower half. In 2011, 44.6 million people relied on food stamps in order to get by (Rosenberg, 2011). If one focuses on militarizing and allows programs like food stamps to slip away, 44.6 million people could potentially suffer greatly.

The Benefits for the Rich Outweigh the Ones for the Poor

Although some supporters of Donald Trump advance the argument that there are some benefits for the proletarian class under the Trump plan, the benefits for the upper-class citizens outweigh the benefits for those from the lower class. The outcome is that it makes the minute benefits for the lower half almost irrelevant. At a convention in 2016 in Scranton, Pennsylvania, Trump stated that he would “massively cut taxes for the middle class, the forgotten people, the forgotten men and women of this country, who built our country” (Ydstie, 2016).

However, if one was to examine the tax plan, it becomes clear that it will not benefit the middle or lower class; instead, the upper class is likely to be benefited (Ydstie, 2016). The top 0.1 percent of breadwinners would see a cut of 7 percent, whereas taxpayers making the lowest income would see less than a one percent cut (Ydstie, 2016). A Professor of Law at NYU, Lily Batchelder, explains the claim that the rich benefit from this policy. She states that a millionaire would get an average taxcut of about $317,000, whereas a family making only $50,000-$60,000 would only see an increase of about $560 (Ydstie, 2016). It gets even worse; a multi-millionaire making over 3.7 million dollars would see a tax cut of over $1,000,000 (CBS News). A cut of $560 pales in comparison to the lessening of $1,000,000 from a tax payment.

This type of policy where the rich receive the most benefits and everyone else gets the leftover is called trickle-down economics. Critics are concerned that the changes may affect business investment, thus resulting in the creation of new incentives. Hillary Clinton, Trump’s rival, even coined a special name for the policy: “Trump-ed Up, Trickle-Down Economics” (Blake, 2016). The effect of trickle-down outcome is based on the thought that if the rich get the advantages, the rest of the population will soon follow all citizens win. One of the firmest believers in the validity of trickle-down economics was the 20th century Nobel Prize-winning economist, Simon Kuznets (Stiglitz, 2015). Kuznets’ argument did have merit to it, until the post-World War II period. Since this time, the argument that trickle-down economics is a valid principle has been undermined greatly.

After World War II, the growth of the economy was extremely slow because of the uneven distribution of wealth that had come about from the system of trickle-down economics in place at the time (Stiglitz, 2015). It was finally at this time when taxpayers realized that trickle-down economics was the reason for their post-war slow economic growth, that the supporters of the principle realized that the way to build an economy is not to start at the top but to build from the middle class (Stiglitz, 2015). This is what the issue with the Trump plan is –– the policy favors the wealthy significantly; therefore, it will not be effective in building up the economy for the nation as a whole, let alone the proletarian class. Overall, it can be seen that when the wealth is unevenly distributed and the burden of taxes is placed on the middle class more than on the wealthy, the country spirals downward.

Conclusion

While Trump’s supporters thought that the idea of a businessman becoming president would be great for the US, the economic challenges to the lower-class citizens imply that the Trump Administration will only benefit the upper-class citizens. As can be seen through economic analysis and study of the Trump plan, Donald Trump’s ideas are not suitable for the lower-class citizens. One particular area of concern is the realization that instead of Mexicans paying for the wall that is to be constructed in the Southern border, the lower-class Americans will account for the costs. Furthermore, as seen with increased defense spending, Trump’s plan would actually adversely affect the low-earning class. Thus, even though there are some benefits for an average person, the benefits for the rich outweigh these significantly and the implementation of the trickle-down economics policy will not build up the middle class as was seen historically. While accepting responsibility to “Make America Great Again” is no easy task, it is clear that the efforts to make this slogan a reality will not bore results for the common person. The Trump rhetoric may have been populist, but the economic plan is far from it because the adverse effect on the lower-class citizens outweighs the perceived benefits.

 

References

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CBS News. (2016). For some in middle class, Trump plan would mean tax increase. CBS News. https://www.cbsnews.com/news/for-some-in-middle-class-trump-plan-would-mean-tax-increase/

Cohen, Z. (2017). Trump proposes $54 billion defense spending hike. CNN. https://edition.cnn.com/2017/03/16/politics/donald-trump-defense-budget-blueprint/index.html

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Ydstie, J. (2016). Who benefits from Donald Trump’s tax plan? NPR.org. https://www.npr.org/2016/11/13/501739277/who-benefits-from-donald-trumps-tax-plan