Donald Trump

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It’s time to try to evaluate President Donald Trump (Trump) from historical perspective, To evaluate his failures and achievements we need to look at it from economic, political and moral  point of view.

The last US president with significant positive achievements in historical dimensions. G.H.W.Bush’s presidency was between 1989-1993. Under his presidency the USSR fall apart and finally at 1992 USSR was dismantled. Now from historical perspective it may look as an obvious development, but at the time it was not so obvious. After all USSR was a major nuclear power, that held its nuclear arsenal all over USSR including new countries as Ukraine and Kazakhstan, that suddenly became a major nuclear power, after USSR held its nuclear arsenal all over USSR including countries as Ukraine and Kazakhstan. The collapse of USSR was not only collapse of an enemy, but shift in world power structure, and destabilisation of the old world order.

Other achievement in Bush’s presidency was his successful first US-Iraq war. After Sadam invaded Kuwait in August 1990, G.H.W.Bush assembled a multi-national coalition, to oppose the invasion. G.H.W.Bush successfully pacified Sadam Hussain, without the need for post war US involvement in the post war Iraq politics, saving from USA long term occupation with all the costs it had.

During Reagan presidency years, the national debt of US started to increase  and G.H.W.Bush had to try to cope with this long-term damaging phenomenon. Bush also advanced the NAFTA agreement, what was a major step towards economic policy of globalisation. But it came at the time of entering the Russian, East European and Chinese economy into the world economic stage, process its enormous economic consequences at the time hardly anyone could estimate. Definitely at the time it was hardly understood, to where the world economy is heading too. As Russia since 1992 became a major supplier of energy and raw materials, and China a major industrial production factor, in parallely their markets were opened to Western products and capital, it caused a major shift in the hlobal economic realities. During this time, the new globalised economy started, and G.H.W.Bush definitely contributed to this process.

G. H. W. Bush policy included tax increase, that was opposed by his own Republican party and proposed budget cuts opposed by the Democratic party. It was also the time, when the Republican party definitely abandoned its support for restraining the public deficit by tax increases.

At the end G.H.W.Bush’s budget cuts and tax increases came when the US economy was already in a stagnation and unemploymen relatively high unemployment. As a result of it, even if this economic trend was short termed and transitional, G.H.W.Bush’s was not reelected, in spite of his great achievements in international politics and his responsible economic policy. Instead was elected Clinton, who enjoyed the fruits of G.H.W.Bush’s policy in economics and international politics, and rather strengthened his predecessors policy of economic globalisation than opposed it.

The globalisation economic process since then created strong opposition mainly in the Western highly developed world, who in relative terms paid the price of the relative increase in living standard in many economically underdeveloped regions,  mainly in Asia, and especially in China. This opposition doesn’t take into account the added value of globalisation to the western world in terms of price stability that continued in USA in spite of huge and ever growing public deficit in the western countries, and very low saving rates of private households, especially in the USA.

Because the political ideological tendencies are coming, metaphysically speaking; from guts, while the intellect comes from the brains, the ideological propensity of the human individual is many times stronger than his intellectual understanding. If someone claims, I’m a Republican or I’m a Democrat, it all comes from the guts. And it is no use to talk to the guts. It is like trying to train right handed to be left handed. Democracy is great when it works, but it can bring in some circumstances,  mainly in times of overall crisis disastrous choices of the electors.

The major achievement of modern democracy is the instrument for change of leadership, that is composed into the Democratic system. Democracy is not the best to choose the best leadership. On the contrary, the masses when choosing politicians make many times mistakes. Democratic politics is about local short term interests, while since the rapid industrialisation most of the problems democratic leadership have to cope with are long term and global problems. Some US presidents, whose policy was not isolationist and Great Britain until end of WWII, understood this. Most of the US presidents in twentieth century were focused in internal USA policy, and tried to be neutral to many inter European conflicts. This could work until the US interests were not endangered. Change from US internal to whole global external policy happened to Wilson in WWI, and Roosevelt in WWII, and continued since then. 

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George Bush, Junior was elected to focus US policy in internal problems, mainly improving the economic performance, even if Clinton’s presidency was rather successful, without major conflicts, or international policy breakthroughs.

No one expected that Bush would have to cope with the post September 11 situation. And when he had too, at beginning he, or rather the US generals in the Afghan war, achieved relatively easy victory. US military supporting the tribes in the northern region of Afghanistan, who with US air force support have overwhelmed the Taliban in few month.

But this easy victory caused to Bush Junior to become uncautious. He deepened his involvement in Afghanistan, imposing an illegitimate very corrupt government, and did not pull back the US army, as his Father did a decade before.

Bush’s next major mistake was to invade Iraq. This disastrous war started not so much for failure of the US intelligence, as due to ideological prejudices of Bush Junior’s administration. The Bush administration disregarded intelligence reports by Paul Pillar, the CIA’s national intelligence officer for the near east and south Asia, who two months before the invasion of Iraq expressed his concern about  the war. In his report was warning that a war could unleash a violent insurgency and rising anti-US sentiment in the Middle East.

Danny Ayalon, who was Israel’s ambassador to the United States at the time of the Iraq invasion, and who sat in on the Bush-Sharon meetings, was directed by Sharon to warn all Israelis visiting Washington not to encourage the American scheme for war in Iraq.

Department’s policy planning staff and later chief of staff for Secretary of State Colin Powell said, Israel tried to convince the Bush administration that the main problem in the region was Iran, not Iraq.  According to Lawrence Wilkerson, Israeli officials warned the George W. Bush administration that an invasion of Iraq would be destabilising to the region and urged the United States to instead target Iran as the primary enemy. Wilkerson, then a member of the State Department’s Policy Planning Staff and later chief of staff for Secretary of State Colin Powell, recalled in an interview with IPS that the Israelis reacted immediately to indications that the Bush administration was thinking of war against Iraq. “The Israelis were telling, Iraq is not the enemy Iran is the enemy.” Wilkerson describes the Israeli message to the Bush administration in early 2002 as being, “If you are going to destabilise the balance of power, do it against the main enemy.”  Wilkerson notes that the main point of their communications was not that the United States should immediately attack Iran, but that “it should not be distracted by Iraq and Saddam Hussein” from a focus on the threat from Iran.

Israeli Prime Minister Ariel Sharon asked for a meeting with Bush primarily to discuss U.S. intentions to invade Iraq. In the weeks preceding Sharon’s meeting with Bush on Feb. 7, 2002, a procession of Israeli officials conveyed the message to the Bush administration that Iran represented a greater threat, according to a Washington Post report on the eve of the meeting. After that meeting, the Sharon government generally remained silent on the issue of an invasion of Iraq. As late as October 2002, there were still signs of continuing Israeli grumbling about the Bush administration’s obsession with taking over Iraq. Both the Israeli Defence Forces’ chief of staff and its chief of military intelligence publicly dismissed the Bush administration’s position that Saddam Hussein’s alleged quest for nuclear weapons made him the main threat. The Israeli chief of military intelligence, Maj. Gen. Aharon Farkash, said Iraq had not deployed any missiles that could strike Israel directly and challenged the Bush administration’s argument that Iraq could obtain nuclear weapons within a relatively short time. He gave an interview to Israeli television in which he said army intelligence had concluded that Iraq could not have nuclear weapons in less than four years. He insisted that Iran was as much of a nuclear threat as Iraq.

The cost of the Afghan and Iraqi wars is estimated of about 1 trillion dollars. Bush Junior’s policy of public deficit, since then supported by the Republican party and his presidents, was the major cause of the economic collapse in 2007-2008. Bush Junior listened to his economic advisers, and injected, then unprecedented trillions of public dollars into the financial system. All what’s happened in US economy since then is only the backfire of the economic events in 2008.

The colossal failure of Bush Junior’s economic policy, supported by the Republican party, didn’t change anything in the party. On the contrary. It made it even more short sighted, arrogant and disastrousas to long term US interests.

Obama was expected to be the reaction and complete opposite to G.Bush Junior. He was intelligent,  wonderful speaker, gave hope for everyone who was tired of US politics and its failures. But he failed. His failure came partly because of the fierce opposition to his policy by the Republican party, opposing everything he tried to do. The peak of the Republican party cynicism was to put a stop to the public deficit.  The sama Republican party that under Donald Trump a few years later supported tax cuts that caused the annual public deficit to reach almost a trillion dollars.

Obama when started presidency, had the supermajority that could enabled him to make legislation in major economic social issues, US needed urgently to implement . And those were:

A. Public infrastructure. (Electricity grid, fast trains, etc.)

B. Public education.

C. Health care system  ( the US health care system is twice as expensive as the European and still not covering tenths of millions of Americans).

D. Environmental policy.

E. Reform in the financial system, when the banking system was knocked down after 2008.

All these changes are about solving long term problems of the USA and as such are also problems of the world. Since Obama failed to implement most of the needed reforms, he happened to be just an another politician, who looked above his shoulder to the next election, and didn’t want to be blamed for the fiasco of the midterm elections of the Democratic party, that came anyway.

To Obama’s sake can be said, he entered the office, when the economic crisis was at its peak. He inherited an economy on its knees. But the expectations from him were so much higher than he performed,  that the reaction to Obama’s failure to deliver what was expected from him, together with the annoyed white population in the small US cities in Mid West, who couldn’t stand the idea, of a coloured president, brought Trump to presidency.

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So what’s so bad about Donald Trump’s economic policy? After all, his 4 years of presidency, he can be hardly judged. Three years after his presidency started, covid epidemics completely shuffled the cards.

US politics  is not just politics as of any other nation. When establishing USA, the founding fathers had no precedent at the time of a Democratic Republic. Europe before French revolution was ruled by kings and emperors. French revolution hadn’t started yet, Industrial revolution was an unknown term, Germany was divided among many kings and prince hoods, England was kingship with Parliament, Austro-Hungary was a monarchy, Russia was ruled by an absolutistic Tzar, Italy was divided, South America was Spanish colony, Brasil a Portuguese colony, Asia, Africa were all colonies, except of very few independent kingdoms, China was ruled by Cisar. Even Nederland by then had kings. The only previous precedent for Republic was Rome and Greek city states from more than 2000 years ago. What existed were philosophical writings about politics of  Plato, Aristo, Hobs, Lock, Rousseau, etc. Based on these ideas of philosophies, the USA was created, with it’s declaration of independence. The words, “…self-evident truth, that all man are created equal”, were not self-evident at all, at the time, (1776), when kings and aristocrats ruled everywhere. Just three years later followed by the French revolution, and the ideas of Republic, or at least constitutional kingdoms became self evident. It took less than 50 years, and most of South America get rid of its colonial rulers, etc.

In modern politics prevail two different kinds of political concepts. The one, that is built on the platform of independent institutions, civil society, human rights, and equality in front of law. The second is based on monopolistic governmental structure, built hierarchically from top to bottom, where the law is not applied equally on commoners and the ruling elites. The extreme case of such a system at present is Putin’s Russia, Iran of Ayatollahs, etc.

To judge Trump’s performance as president,  we need to judge his performances in economics, foreign policy, internal policy, and political morality.

Economy:

The major economic issues defined by Trump as problems to deal with, were, unemployment, national deficit, imbalance in international trade deficit,  and economic growth. It is very hard to judge how much Trump failed or was successful in achieving any improvement in these goal, since the result of any change in major macroeconomic policy will have full effect only a few years after the economic decisions were made. But after the third year of Trump’s presidency, covid epidemic started, and soon enough with it came huge economic disruption. So if we have to judge Trump’s policy according to the parameters emphasised by Trumpas as major macroeconomic goals, that can be measured in data as;; rate of unemployment, trade deficit, national debt, economic growth.

To analyse the effectiveness of Trump’s economic policy, we need to find some major shift in trends in economic data in the three years following the Obama’s presidency in these above mentioned parameters.

One of the major economic decisions Donald Trump and Republican party have done, was to cut the corporate tax rate from 35 percent to 21 percent at december 2017 just one year after Trump became prerogative. At the time, the Trump administration claimed that its corporate tax cuts would increase the average household income in the United States by $4,000. Did it?

Accordingly  this proclamation means policy of increased economic growth, employment and household income.

To analyse Trump’s economic politics performance, we need to start with the period previous to Trump’s presidency.

The unemployment rate when Obama started his presidency was about 10%, the highest since the great depression of 1929-1933. When he left his office 8 years later it was 4.7%. During Trumps presidency, two years later, before the pandemics, the unemployment reached 3.5%. I would say this achievement was a continuation of the trend Obama started. Full employment is considered to be about 3% unemployment, and if lower, it is considered to be inflationary and not stable. So the unemployment rate of 3.5% is pretty close to this figure. Overall, unemployment rate didn’t change substantially before the epidemics, but there was no need to make major corrections to the existing trends, to achieve this decrease in unemployment rates. On the contrary, the correct economic policy would have been to put brakes on the government deficit and monetary expansion, what Trump definitely didn’t do. When the federal reserve increased the interest rate, as a response to inflation pressures, Trump, because of his frustration with stock market losses, at end of 2018 tried to fire Powell, the Federal Reserve chairman. To his surprise he discovered, he had no authority to do it.

Another of Trump’s declared major economic issues was the US economic growth. Under president Obama on average the US economy grew annually by 2.3%, , while under Trump before the pandemic it grew at a rate of 2.5%. Again the same conclusion as with the unemployment rate, there was no major change in the economic growth rate compared to pre Trump presidency, rather it was a continuation of the trends that started during Obama’s presidency.

The third major issue Trump emphasised was reduction of National Debt. National Debt is result of accumulated government deficit through the years. High national debt has to be covered by Government loans, are becoming government debts in form of government bonds or cash money (M3) in the local currency. Such accumulation of financial liquidity, held in domestic or foreign entities, causes financial instability and potential for an outbreak of inflation.

At year 2000, when Clinton’s presidency ended, the national debt was 55% of the GDP, and the government budget ended with surplus. At year 2009, when Obama took over the presidency, following the Presidency of Bush Junior, in the middle of the deep economic crisis, the national debt was already about 82% of the GDP, and the US and world economy was in the middle of the economic crisis. The need to cope with deep economic crisis, at the time, the National debt growth was at the time a necessary. The full extent of National debt was not fully expressed in the data at the time. Most of the increase in the national debt during the Bush administration was caused by the costs of war in Afghanistan and Iraqi war, and bailout of the financial system in the last year of Bush Junior presidency.

The major cause of the economic crisis that started during 2007-2008 was a result of accumulated deficit in balance of payments, caused by low savings rates of US households and high government deficits mentioned above, that can be seen also as negative saving rate. These debts of USA had to be transformed back in some form to the exporting countries.

The private US financial institutions, took the opportunity,  and introduced intermediary activities of financial assets, accumulated due to these financial imbalances in forms of liabilities of institutions, seen as too big to fall, or connect to US government housing policy. The obligatory agreements of these private entities, appearing as backed by the US government, were wrapped in parcels (CDOs), and were sold to the net exporting countries, as solid US government backed financial assets. This financial machination came to its end in 2007-2008 with the subprime mortgage crisis, that peaked with the collapse of Lehman Brothers bank.

On the background of the economic crisis, with about 10% unemployment and negative economic growth, Obama’s policy of increased government deficit was understandable and justified. During Obama, the National debt reached 105% of the GDP. But the National debt growth as percentage to GDP was stabilized at this level between the years of 2016-2018, while in the last two years of Obama’s presidency, it started a very slow and mild correction trend.

At 2019, before the pandemics outbreak the National debt increased to 107% of the GDP, and the annual government deficit grew from about 3% of the GDP between 2014- 2017 to 4.6% in year 2019. This increase in the deficit ratio before the pandemic was a direct consequence of Trump’s economic policy of tax cuts, from which mainly benefited the corporation. This tax cut created free cash in corporations  that invested it into their own stock buybacks, and not into real investments. These buybacks caused unprecedented increase in the share prices, and the stability of stock exchange prices became a major macroeconomic factor, that can endanger macroeconomic stability itself.

Policy of government deficit was implemented by Trump in times of full employment, when it is more correct to squeeze the public deficit, with expectations for the potential troubled times, when the deficit is the right tool to help the economy. The economic crisis that followed the outbreak of the pandemics at the beginning of 2020 resulted huge increase in the national debt to 129% of the GDP at the end of 2020, year that was also the end of Trump’s Presidency.

The last economic issue, Trump promised to solve, was imbalances in the trade and trade deficit.

The only way to treat problems of trade deficite in the short term is to increase the national savings that can be achieved by reduction of aggregate demand, and release of resources to increase exports or/and decrease imports. On the long term the deficit in trade balance can be corrected through economic growth. An immediate change  can be achieved by devaluation of the local currency, decrease of disposable income of the households, and/or decrease of the government deficit.

But Trumps tried a different policy, not implemented since the policy of globalisation, of creating administrative obstructions on the imports. Trump attacked the net exporting countries, mainly China, but also Canada, Mexico, Germany and Japan. This policy caused mainly disturbances in international commerce, but caused very little change in the US balance of payments, and the trade deficit. At 2016 the trade deficite was about 400 billion dollars, 2.7% of the GDP, 2019 the year before the pandemic it ended at about 600 billion, and in the following year 2020, the US current account deficit reached almost 700 billion US dollars.

The conclusion,  Trump’s economic policy  didn’t change the trend of the big deficit in US trade balance, but it  caused disruptions in international politics, mainly with China, but also with the closest friends of the USA, as Canada, Mexico, European Union, and Japan.

So overall, Trump’s economic policy, i would dare to say was a failure.