patrick.net

Current proposals will worsen inequality and harm those Trump promised to protect—while further enriching the top 1%

Who wins with budget and policy proposals advanced by President Trump and Congressional leaders? Using a new model of the US economy developed with INET, economist Lance Taylor concludes: the top 1% of US households. The losers? The “forgotten people” Trump pledged to help. Only a power and resource shift from capital to labor could reverse entrenched trends, says Taylor.

President Trump, in his inaugural address and elsewhere, rightly says that over the decades since 1980 American household distributions of income and wealth became strikingly unequal. But if recent budget and legislative proposals from Trump and the House of Representatives come into effect, today’s distributional mess would become visibly worse.

First, I will sketch how the mess happened, then I will propose some ideas about how it might be cleaned up. I will show that even with lucky institutional changes and good policy, it would take several more decades to undo the “American carnage” that the president described.

How we got into today’s distributional mess

In an INET-sponsored project at the New School for Social Research, we drew on standard government sources to rescale data on income and wealth distributions to be consistent with national income and financial accounts.1 Rescaling allows consistent macro level analysis of distributional shifts. We put together a demand-driven economic growth model to assess possible impacts of Trump-style policies and egalitarian alternatives.

Figure 2: Sources of income for the top one percent

Figure 3: Uses of income by the top one percent

Trump’s and the Congress’s budget and legislative proposals could only work for his “struggling families” and “forgotten people” if they would generate strong trickle-down growth. Structural constraints on income distribution and wealth dynamics won’t let trickle-down happen. His slogan about “America First” is for the top one percent of income distribution – effectively a “capitalist” class – not for “workers” in the middle of the income distribution or the struggling, forgotten households further down.

Much More: Detailed Read, Lots of Graphs Etc. https://www.ineteconomics.org/perspectives/blog/trump-style-policies-will-deepen-the-american-carnage