← Economic Update with Richard D. Wolff
Economic Update with Richard D. Wolff
Making Sense Of Trump's Economic Plan
00:31:04
This week’s episode of Economic Update features an analysis by Professor Wolff on: 1. How Trump seeks to address the problem of costly American wars and their impact on sharply rising budget deficits, 2. How the rising U.S. debt has led...
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Richard Wolff
Welcome, friends, to another edition of Economic Update, a weekly program devoted to the economic dimensions of our lives and those of our children. I'm your host, Richard Wolff. Many of you, for months now have been sending in comments to Charlie Fabian as we invite you each week to do asking me to bring some sense, some cohesion, some overview, to make clear what the Trump administration's economic plans and programs actually are. And you have said, quite correctly, that it is very hard to make sense of that from the way the mass media are reporting it. It's very herky jerky. It's very fragmentary. They don't put the different parts together. And when you add Mr. Trump's penchant for changing his mind and yes, one day, no, the next, you have a situation that makes it all look like chaos, which is indeed a word that much of the mass media has been comfortable using. Well, I'm going to disagree. I think there is method in the madness, even if there is some madness in the method, and that it's worth taking the time, which is what I'm going to do today, to put sense into it all, to show you what the idea is that is trying to be realized by what Mr. Trump and his administration are doing. I want to remind you, of course, to keep the information flow going to Charlie, and you can reach him, as I always tell you, at charlie.info438mail.com and it is truer than ever that a companion book to understand the very things we're going to do today would be our new understanding Capitalism, because that's what we're going to do today, understand US Capitalism right now. So let's jump in. There is a plan here. There is, even if it's not all that clear, even if, even if there are loose ends and even if there are quite a few contradictions within it, there is animating Mr. Trump and his administration an idea about what the problems are that face the American economy now and a plan of sorts to deal with it. I am not saying that this is working. It probably isn't. And I'm not saying that this hasn't got horrible dimensions. It does, and I'll mention some of those. But it is not correct, in my view, to see no plan to reduce all of this to Mr. Trump's building his own operations, making money. All those things may be true. But I want to focus on, on what the economic problems are and what the plan here is to deal with them. So let me begin at the biggest, broadest level, the United States problem, its Economic problem now can be stated bluntly, but also clearly. The American empire, built up after World War I particularly, and solidified into global dominance after World War II, has peaked and is now declining. That is a huge problem, because as we grew from a small, unimportant colony of Great Britain in North America and became the colossus that the United States was, particularly in the second half of the 20th century, we began as a nation to take it all for granted. That's that business about American exceptionalism. Not only were we the dominant economic, political, ideological power in the world, but not only did we establish a kind of informal but nonetheless tightly controlled global empire in which the US Dollar became the global currency, in which the US Military overwhelmed everybody else's. And all of that was true. We did make a mistake, and the mistake was not understanding that every other empire in the history of the human Ra that arose also fell away and died. No empire lasts forever. None ever did. And that meant that the United States would in all likelihood have to also eventually decline. Well, eventually arrived, and we are declining. I'll come back to that in a moment. But I want to express the second level of this problem. We relied on our empire, as most countries who develop empires do. Great Britain is unthinkable as a country without the British Empire. To get an idea of what happens if you take away the empire, look at Britain now. It has gone back to being what it was in the many centuries before they had an empire. It was a cold, wet, offshore island of the European continent. And that's what it is again. Now. You have to understand that, because that is the root of the economic problem Mr. Trump faces. Mr. Biden faced it, too. Kamala Harris would have faced it if she had won the election. It's been happening now for a few years. 10, 15 would be a good estimate. Now, what does it mean that your empire declines? Well, we have the signs of it all around us. The dollar is not the universal currency the way it was 20 years ago. Banks around the country use other currencies as reserves in place of dollars. Increasingly each year. The United States doesn't account for the percentage of global trade that it did 10, 20, 40, 60 years ago. It's been going down. It has shrunken in terms of its relative importance in world economy, and the rest of the world has replaced it in many ways. I've talked about that on this program, so I'm not going to do it again. Now, what I want to stress, though, is that most of our politicians have responded to the decline of our empire and to the difficulties of American capitalism that result by pretending none of that is happening. It's what psychologists call denial. We just had a presidential race. Three candidatestrump, Biden, Harris. None of them talked about our empire, let alone facing its decline, let alone talking about how to deal with the problems we have as an economy, because our empire is fading. They pretended none of that was going well. Maybe, let me be fair, the MAGA slogan is a kind of indirect way of admitting it. If you have to make America great again, it's a kind of admission that is not so great now. But it was, and we're going to go back. What an interesting admission. The Trump people, in that way, show us they get it in some way. They can't quite say it. They wouldn't dare admit it in public, but they know, as do most of you, if you think about it, which we don't do in this country because it's a kind of taboo topic. Well, what is Mr. Trump's plan to deal with what I've just said? Here we go. First, he wants to stop the forever wars. He said that on the campaign trail umpteen times. And he has spent the first several months of his administration trying to deal with the war in Ukraine, to deal with the war in the Middle east, and to generally talk about what, well, not fighting wars. And the reason is our empire has lost most of the wars it's fought in the last 30 years. We lost the war in Vietnam. That country is run by the Indochinese or Vietnamese Communist Party. That was the enemy of the United States. They won. We lost in Afghanistan. The enemy of the United States was the Taliban. They run that country now. They won. We lost in Iraq. We were supposed to. I don't know what. But the people who were there when we got there are the people running that society now. Saddam Hussein is gone, but all the rest of it remains. They persevered, they persisted, we lost. And in the Ukraine, we're in process of losing. This is not a sign that the empire is able to function very well, to defend itself. Number two, those are very, very expensive wars, every one of them. It costs a fortune. And when the United States fights a war, it never dares to tax its people to pay for it. If you think the opposition to the wars in Vietnam or Afghanistan or Iraq or now Ukraine is strong, and it is, and it was. It would have been much stronger if every American family had been informed, we're going to tax you 5, 10, $15,000 each to pay for the Enormous cost of, of these wars. The United States government can't afford it. That's what happens when empires decline. Mr. Trump doesn't want to fight these wars and he doesn't want to pay for it. As I'm Speaking to you, Mr. Trump and his administration is making the decision of whether, and I'm now quoting the president, we will walk away from the Ukraine war. Leave it to the Europeans. The whole Ukraine war is a war on the cheap. No American troops over there, or very few. It's a war fought without mobilizing the American armies, which is what costs a fortune, making the Europeans pay half or more of it, which saves us a fortune. It's war on the cheap, which is what you would expect from an economy that's in trouble. But where it shows up the most, the decline of our capitalism is in the budget of the government. What resources does it have? And there we're in terrible trouble. For years now, we cannot function without borrowing as a nation, huge amounts of money now measured each year in the trillions of dollars, two, three trillion dollars. Spending more than we take in in taxes, among other things, for these very expensive wars. But there's a deeper reason. American corporations and the rich want the government to do things for them, all kinds of things, but they don't want to pay taxes. And the mass of Americans, the working people, they want the government to do all kinds of things for them. And they don't want to pay taxes either. But the difference between the two is that the corporations and the rich have something that the government money, they provide the bulk of the money to that funds, the political parties, the candidates, the governments, all of it. So they get their way, they get lots of services, and they don't pay much in taxes. They've paid less and less over the last century in a straight line down the mass of people can't mobilize themselves yet in this country. So they still pay quite a bit. But you can't keep taxing them because they won't vote for you. Out of that dilemma, as I'll show you after the break, comes the difficulty of our government and its inability to function because of it. We've come to the end of the first half. Stay with us. We'll be right back. Before we jump into the second half of today's show, I wanted to thank you for your very generous response to our fundraising efforts this year and in particular in the last couple of months. And in part responding to that, we are extending the availability of our limited edition linen covered hardcover version of Understanding Capitalism, the book I wrote and that we have been making available now for quite a while. If you are interested, I will be signing copies of that hardcover and they will be available to you as they have been over the last few weeks. Just simply send an email to us@infodemocracyatwork.info and put in the subject line limited edition. We will send you all the information you need to order and receive your copy signed copy of Understanding Capitalism in its hardback. And thank you again for your kind attention to the fundraising dimension of what we do. Welcome back, friends, to the second half of today's economic update. We're analyzing and bringing sense to what the Trump government is doing. The basic problem of our government is that the rich people don't want to be taxed for all the things that the government needs money to do for them. And the mass of people don't want to be taxed for all the things they want the government to do. And so what happens is the corporations, the politicians, excuse me, are stuck. They can't provide the services we need without taxing us, they thought, but we don't want to be taxed and hold them accountable. So they've come up with a solution. How do you spend money for the mass of people and for the corporations and the rich without taxing them? The answer, you borrow it. And that's why we do that. And that's why the national debt of the United states is today $35 trillion and our annual output of goods and services is about 25 trillion. So we're not even close. And that's a sign of trouble when you are borrowing more than your total output in a year. It's a kind of measure been around for many years and used to signal distress. And distress is what we got a government that can't keep doing this. The signs are crystal clear. There are three major rating agencies in the Standard and Poor, Fitch and Moody's. Moody's over the last few weeks joined the other two in demoting the credit of the United States. We're not aaa. We're not the best. We are a risky borrower in the words of the world. Many other countries are not. We are the United States, the biggest debtor country in the world. And lenders are looking at the Americans and wor worrying will a day come when they can't pay back or they won't when their own people will rise up and say, you can't pay interest to rich people and foreign governments and corporations if the money that you're using isn't available for basic medical care, basic education, basic road maintenance. Uh, and at that point, the lender of the people who lend to the US May not see their money repaid, and they're getting nervous, so they're pulling their money out. That's why the dollar has diminished in value by almost 10% since Mr. Trump was inaugurated. The signs are everywhere. The United States isn't the triple A rated borrower that it once was. Uh, and now you can begin to see a certain desperation creeping in to what's happening. And that's very important that you understand that Mr. Trump and his team are desperate, and they're doing desperate things because they don't know how to solve this problem. There's no magic way to make the empire return. There's no magic way to deal with these economic problems that derive from a declining empire and the economic difficulties that that means for us. I've told you on many other programs that all of this is made even more difficult by the fact that the United States has a real economic competitor for the first time in, in the history of our empire. So not only are we going down, but somebody else is coming up and fast, growing much faster than the United States every one of the last 30 years. So what is Mr. Trump doing? First thing he does is he arraigns for his buddy Elon Musk to start saving the government lots of money by firing tens, hundreds of thousands of federal employees. I have explained the nonsense about efficiency. It has nothing to do with efficiency. The federal government in the United States is the same size today as it was 50 years ago. We are 100 million more in number, but we haven't required more federal employees. That's a sign of efficiency, not inefficiency. And none of this is about efficiency. It's about saving money so the government doesn't run such big debts. So it fires a quarter of the veterans who work at the Veteran administration. It lays off the aid. It lays off the Education Department. Incredible. That's not efficiency. That's a hatchet job. And it's done out of desperation. Mr. Musk, who sits on top of a bureaucracy at Tesla and several other corporations, knows how slow and careful you have to be to build and preserve efficiency. You don't go through firing whole departments. It's childishly inappropriate unless you're desperate. And then there's the second desperate Mr. Trump's tariffs. He has decided to hit every other country in the world with a tariff a minimum of 10%. And many countries, like China Much more. That's a declaration of desperation. You know why? It makes every other government angry. We are trying to solve our problem at their expense. Making them pay a tax or making Americans, when they buy their products pay a tax. Means they'll sell fewer products. It hurts them. A president they didn't elect is hurting them. Not sitting down, having meetings, figuring it out, not coming up with a program where we share the burden. No, no, no. We're fixing our problems at their expense. And, you know, a tariff is like a sales tax. We all pay whatever. The importer charges us more because the importer has to pay the tariff. Whether you're rich or poor, you pay the same extra tariff. Makes no distinction between rich and poor. It's not like the graduated income tax. It's not progressive. It is regressive. The opposite. Mr. Trump is putting a burden on all of us in the rising prices we will be paying already are. And putting a burden on every other country. And guess what? In every other country, the local politicians there are now able to say, yeah, we have problems here in Asia, Africa, Latin America, but they all come from Mr. Trump. Are they blaming Trump for problems that are partly their own? Absolutely. But Mr. Trump has given them the invitation, given them the excuse. We are being isolated as a country because in desperation, we are trying to solve the problems of a declining empire and a declining US Capitalism at the expense of our working class and the rest of the world. That's what this crazy push is, to get rid of all our immigrants, illegal, undocumented or not. What is that about? This country became strong precisely because it could absorb the immigrants generation after generation. Find them initially bad housing, bad schooling. Absolutely. But giving them a chance if they work, and they did, and they brought up the country with them. Deporting means we no longer can absorb what we used to not only absorb, but welcome. That's not a sign of strength. That's not a sign. America number one. It's the opposite. It's a sign of desperation and no longer being capable of doing what we once did. And now, finally, the big anti China push. What is this about? We don't permit American companies to sell all kinds of things to China. We put huge tariffs against China so that they can no longer sell to us. We hamstring their executives. We try to punish them every which way we can. And it's obvious what we're trying to do. Fix our problem at their expense. But more slow them down. They're catching up. They're still behind us, but they're catching up and they're getting close and we're trying to hold them back. That's a losing proposition. In the 19th and 20th century, particularly in the 19th, the British, who had been doing it in the 18th century, tried to hold back the United States. Our War of independence, let me remind you, had a lot to do with an event in which the King of England, George iii, put a tax on tea. Remember reading about it when you were in school? And the merchants in Boston who didn't want to be taxed by a foreign king, threw the tea overboard into the harbor in Boston, the first and the most famous Tea Party. We had to fight a war with the British to get free of them, to be able to develop our country. No sooner had we fought the war of 1776 than we had another war in 1812. Few years later, the British tried again and failed again. You know what a lesson was learned by? Can't stop this. Economic development grows, and it grows unevenly, and it grows often in places that are new, faster than in places that are old. It's in fact the kind of pattern. That's why Europe is now a backwater relative technologically to the United States on the one hand and China on the other. What the British couldn't do to the Americans, the Americans cannot do to the Chinese. And a war is not a way to figure that out. Not when both sides have enormous stockpiles of nuclear weapons. The United States and on the other side, China allied with Russia. It's not working. And trying to do it in these ways is desperate. And the Chinese are not bending. They don't need to. They understand that history is on their side. We can't yet figure out what to do because we can't face what I just said, not as a nation. We're still denying it. We're still acting like we're the king. We can do this. We can do that. Losing the wars, losing the struggle. Mr. Trump's big, beautiful tax bill that passed the House of Representatives at the end of May guarantees that our deficits will go on in huge trillion dollar sizes for the next several years. We can't do that. Doing that got us to everything I have summarized today. But look, he can't do. Doesn't work. Too much resistance to the tariffs, too many retaliation tariffs that are going to hurt us. The United States is becoming isolated in the world. Recent polling shows that around the world, the US Used to be much more favorably viewed than China. But that's been reversed, especially since Mr. Trump won the election and took power it is not a question of saying China's good and America's bad, any more than such a silly idea was true in reverse. It's facing honestly where we are. If we don't do that, we're going to make mistakes. Ukraine misunderstood that Russia could and would turn to China and solve the problems it faced in fighting that war. The United States hadn't planned on it. The Europeans hadn't expected it. They made a mistake. But it becomes, if you think about it, a result of denying the decline of the empire and the decline of American capitalism, not understanding that desperate measures, which is what Mr. Trump's plan is about, will not likely work and will be in any case extremely costly. That's the reality of the economic problems and programs of the United States government as I speak to you. Thank you as always for your attention, and I look forward to speaking with you again next week.