Trump’s Version of Populism: Trickle Down Economics on Steroids


By Ron Whitehorne, 215PA Executive Committee Member

Donald Trump’s run for the presidency in 2016 proclaimed to white working people in the “Rustbelt” states that he would bring back manufacturing jobs, raise stagnant wages and reduce the tax burden. This appeal was certainly a factor in his victories in the four swing states of Michigan, Wisconsin, Ohio and Pennsylvania where decades of economic decline under both Parties strengthened the appeal of a populist politics. Trump combined populist rhetoric with a play on racial grievance in which white working people were portrayed as victims of policies that pandered to undeserving people of color. Come election day this proved to be a formula for securing an electoral college victory.

Promises Kept?

So how has Trump done when it comes to keeping his populist promises? This question is particularly important in states like Pennsylvania, which, once again, will be critical in determining the outcome of this year’s election.

 The clearest answer comes when we examine the signature achievement of the Trump Administration, the passage of the Tax Cuts and Jobs Act in 2017. At an Indiana rally Trump said “the largest tax cut in our nation’s history will protect low and middle income households, not the wealthy and well connected.”  This has to qualify is one of the biggest whoppers in Trump’s much catalogued list of lies.

 It did lower taxes for most Americans, “$2000 dollars for the typical family” according to Trump.  While this figure is debatable, what is beyond dispute is that the big winners were not typical families but rich people and corporations. 

 Tax rates were lowered with the biggest changes benefitting the top earners. The rate for these folks was lowered from 39.6% to 37% and the threshold on which the rate kicks in was raised for married couples from $470,000 to $600,00. But the most dramatic changes were in changes to how corporations were taxed. The corporate tax rate was slashed from 35% to 21%, a trillion dollar tax cut over the next decade. And while the changes to individual tax rates were only to last ten years, the corporate rate change was permanent. Another big factor was the bill’s retention of the so-called carried-interest loophole that benefits hedge funds and private equity firms. All in all,  80% of the income realized  from this tax bill went to the richest one percent of people. 

Far from a populist attack on corporate power and wealth, the Trump tax bill was simply a beefed up version of “trickle down” economics, the idea that giving subsidies and tax breaks to corporations and rich people will promote economic growth, more jobs and thus be good for workers who, however indirectly, will share in this prosperity. This has been a guiding policy of Republicans and some Democrats as well over many decades, deepening economic inequality and failing to deliver sustainable growth.

Where’s the Economic Miracle?  

Trump said his policies would be “rocket fuel for our economy” but the rocket after wobbling off the launch pad, sputtered badly over the trajectory of his Presidency. Corporations had a huge infusion of cash that in the Trump/GOP playbook would lead to substantial new, job creating investment. While some businesses did pay their workers bonuses and others created new jobs, the results were far from what was needed. Much of the new wealth in the corporate coffers went into increasing salaries of CEOs and top management.  The new money also went for huge stock buy backs. The stock buy backs benefitted corporate owners, managers and investors but not workers.

Indeed rather than create more jobs, some corporations actually cut them. Wells Fargo, a bank that reaped billions from the tax cuts, spent 40 billion on stock buy backs and announced that it would reduce its work force by up to 10%. Verizon also cut 10,000 domestic jobs and contracted out 2500 to India.

Where jobs were created it was either in Silicon Valley or in low wage, non-union sectors, hardly good news for workers who yearn for the return of high paying, manufacturing jobs. Manufacturing continues to decline and so do the living standards of those dependent on it.   In 2019 production workers earned 20% below the average national income and a third of manufacturing employees rely on food stamps and other forms of federal assistance according to a University of California study. Not exactly a return to a 1950s style, middle class standard of living that the MAGA folks envision.

Contrary to Trump’s rhetoric and claims, no trend of investment in new industrial plants has developed nor will it. The lure of cheap labor abroad continues to shape corporate investment strategy and Trump’s trade policies don’t address this motivation. In the year after the passage of the tax cuts, Michigan, Ohio, Wisconsin and Pennsylvania lost 16,000 factory jobs. 

 The President makes much of reducing unemployment including Black unemployment in the wake of his tax cuts. While rising employment is certainly good, the context is important.  Increased jobs that are available to workers with only a high school degree or less are low paying and likely to contract as the economic bubble created by the cuts bursts. Evidence is that was happening as economic growth was slowing, prior to COVID.

 Can a Biden Presidency Make a Difference?

So if Trump’s promises were hot air,  what can we expect from a Joe Biden led Democratic administration. Many of us, including 215 People’s Alliance, were Bernie Sanders supporters and were critical of Biden and corporate Democrats generally. In spite of these differences there seems little doubt that Biden will take some important steps to create jobs and raise working class living standards, reversing some of the damage done by Trump and Co.  

A task force drawn from the Sanders and the Biden campaigns developed a joint statement that makes important policy statements related to the economy. Beginning with the COVID emergency, it calls for extending unemployment benefits to more workers, increasing aid to state and local governments, and more rigorous oversight of corporate access to financial assistance.   It calls for raising the federal minimum wage to $15 an hour,12 weeks of paid family and medical leave, universal child care for 3 and 4 year olds, increased funding for food assistance, more investment in affordable housing and revisions to the tax code to benefit low and middle income people. A major program of investment in transportation infra-structure would create good paying jobs.

These demands reflect the Left’s growing influence. At the same time this program falls well short of what is needed. It does not include the Green New Deal or Medicare for all, both programs that would create jobs and improve working class living standards.

We must continue to press for these and other broad, democratic reforms during the campaign and after the election. A Biden victory, particularly if it is based on a robust turnout by constituencies where the Left is strong and includes ending Republican control of the senate, will be a favorable context for winning these demands.

Conversely, a Trump victory will signal more reactionary attacks and political repression on a far greater scale than we have seen. Given these choices, working for Biden’s election is the right thing to do.