A lot has been written lately about how great the U.S. economy is doing. But don’t believe it. The media parrots the latest government statistics on GDP, employment and wages, but is clueless about longer-term economic trends and their impact on the lives and livelihoods of average Americans.
The fact is the U.S. economy is on a sugar high, with asset prices artificially inflated by a Federal Reserve Bank that has lowered interest rates three times in the past year and has re-instituted its bond buying program.
But the Federal Reserve is not the main problem. The Fed is focused on helping ensure the economy does not slip into recession and, by most measures, it is doing a reasonable job with the limited tool set it has available.
The real problem is the lack of a coherent fiscal policy (i.e., the Federal budget) – and for that we need to blame both Congress and the Executive branch. The Trump tax cuts enacted in 2017 with Republican backing were a total disaster – a bonanza for big corporations and wealthy investors.
Despite Republican rhetoric, and the failure of the mainstream media to see the bigger picture, the tax cuts have been counter-productive. They have been used mainly by large corporations to buy back shares or increase dividends to gin up stock prices. Meanwhile, the resulting deficits actually discourage the kind of investment in infrastructure, education and job training that is needed to foster real, sustained economic growth that benefits all Americans.
Remember candidate Trump, the so-called “master builder”, who promised an infrastructure investment program. How did that work out?
And in the meantime, an army of lobbyists are working closely with Trump-appointed Treasury officials behind to scenes to write regulations that allow multi-national corporations to continue to transfer profits offshore and avoid taxes. And so, the Federal deficit, currently estimated at more than a trillion dollars in 2020, just gets larger and larger with no real investment in economic growth.
Eventually, likely sooner rather than later, the bubble will burst.
But it is not just Congress and the President that are to blame. It is “We the People” who have failed to address the corruption inherent in our political process that has led to policies that benefit the rich and powerful while putting our entire economy at risk.
The time for change has come, and not just some little tweaks here and there, as some Democratic presidential candidates argue.