ECONOMIC POLICIES, ANALYSIS, AND RESOURCES
The Economic and Trade Policy Domain tracks and reports on policies that deal with budget, taxation, and finance issues. The domain tracks policies emanating from the White House, Congress, the Department of Commerce and the Department of Treasury. Our Principal Analyst is Ivy Perez who can be reached at firstname.lastname@example.org.
Latest Economic and Trade Policy Posts
Trumpian Economic Policies Likely a Factor in Growing Bipartisan Support for ‘Tax-the-rich’ Policies
Brief #34—Economics Policy Summary As President Trump continues his focus on securing funding for his border wall by any means necessary, some of the most influential democrats are working around the clock to help curb the damage caused by his policies by way of...read more
Brief #33—Economic Policy Policy Summary After more the four long weeks, the longest government shutdown in the history of our nation has ended. This past Friday saw Donald Trump sign into a bill that would temporarily reopen the government and allow most furloughed...read more
Brief #32—Economic Policy Policy Summary As the first week of 2019 comes to a close, the government shutdown shows no immediate signs of doing the same. Officially in its third week, the shutdown has progressed to the point that President Trump has stated that he may...read more
Last year at this time, when I first joined U.S. Resist News, many of the political and economic headlines featured two popular terms-’tariffs’ and ‘trade war’. As Trump tariffs were levied on all matters of imported goods, the negative effects that they were quickly spurring became apparent and the outcry on the part of the industries rose up. These policies quickly spanned to affect the global economy and U.S. farmers were locked out of international trade markets and manufacturers were rendered unable to import the supplies they needed. Given all this, it stands to reason that most of the nation hoped the trade war would quickly be resolved.
Almost a year later, one of the most important aspects of the trade war has yet to be resolved-the matter of trade relations between the U.S. and China. While trade talks between Donald Trump and Chinese President Xi Jinping were initially scheduled for some time ago, they were halted when the Trump administration accused China’s negotiators of going back on earlier promises they had made regarding legislative changes to their nation’s trade policy. China, on their part, accused Trump of not being realistic in his demands. Both leaders are scheduled to meet in June 2019 at the G-20 Summit but even if they agree to restart the stalled trade talks it will take even more time to reach any sort of resolution.
Trump recently increased the current tariffs on $200 billion worth of Chinese imported goods and has made clear threats to impose the same on an additional $300 billion dollars worth. In addition, he went so far as to try and stop American companies from selling components to Huawei, one of China’s most prominent telecommunications corporations. Placing a company like Huawei on a blacklist like this will cause problems for the economies of both U.S and China. The latter was quick to retaliate with some tariff increases of their own on popular American imported goods. In an interview with CNBC, a Chinese Government official stated that China wanted to see the U.S. take action on their part before they would consider resuming trade negotiations.
When he addressed the matter of further tariffs being levied against China, Trump insisted that the additional costs would be covered by the Chinese. That seems to be working out about as well as his promise that Mexico would pay for his proposed wall on the American border. According to a recent study by the International Monetary Fund (IMF) based on data from the U.S. Bureau of Labor Statistics, the opposite is true and that tariff costs have been thrust directly onto the shoulders of the U.S. companies who import the most goods from China.
This pattern is not new to U.S. economists. We saw it during the early days of the trade war when U.S. importers were forced to raise the prices of the products they produced. That caused sales to decline and workers to be laid off. The effects were particularly severe for America’s farmers and agriculture workers who were locked out of the global trade markets on which they depend to maintain healthy profits. The way it looks from here, rural America is once again poised to feel the worst of the trade war’s effects. Many manufacturers who employ large numbers of midwestern workers are being forced to close down plants and lay off employees. Two well known examples are General Motors and The Mid Continental Nail Corporation.
The negative effects for these regions likely won’t stop with job losses, though. Midwestern citizens are likely to see the costs of the consumer goods they also depend on go up. Both Walmart and Macy’s, two of the most popular retailers in the midwest have indicated that that they will likely be raising their prices on everyday products if Trump proceeds with the tariffs he has mentioned. These cost hikes, though, will probably not be confined to items like clothing and household supplies. Rural areas are also home to telecom companies that will likely find themselves unable to import the necessary supplies from Chinese providers. The transmitters and receivers that allow telecom providers to deliver their service to rural areas are primarily manufactured by Huawei. While large carriers such as Verizon and AT&T do not use Huawei equipment, many smaller carriers depend on it. If they are unable to import the products they need, they could be left with infrastructure that is already aging and degrading. Poor weather conditions could compel them to malfunction, causing significant problems for the entire region that could go as far as preventing people from calling 911 in the event of an emergency.
Since the trade war began, Trump has claimed that his administration’s tariff policies are beneficial to the U.S. economy. “Trade wars are easy to win” he proudly tweeted. As previously stated, though, overwhelming evidence points to the contrary. Making it hard for U.S. manufacturers to import the supplies they need and for farmers to sell their crops in international markets is causing significant economic problems. Continuing Trump’s tariff war will only make things worse, particularly for those who were already struggling.
The midwestern farmers who are still suffering from the effects of the trade war were, for the most part, proud members of Trump’s base during his 2016 campaign and they are not alone. Last year saw the Mid Continental Nail Corporation of Poplar Buffs Missouri lay off vast numbers of its workers and Trump’s aluminum and steel tariffs drove their costs through the roof. In Butler County where the factory is located, Trump received 80% of the votes. Perhaps these voters will reconsider who they vote for in 2020.
- The Peterson Institute for International Economics is a nonpartisan think tank that produces research and analysis on international economic policy related matters.
- The Rural Wireless Association is a trade association that advocates for wireless carriers in rural areas and works to make sure their voices are heard on Capitol Hill.
- The Council on Foreign Relations is a nonpartisan think tank and research organization that specializes in matters involving foreign policy and international relations.
Since before he was elected, President Donald Trump’s tax returns have been a source of considerable controversy and speculation from voices on both sides of the aisle. Despite building his campaign on his reputation as a successful businessman and skilled “dealmaker,” Trump went to considerable lengths to hide the documents that would prove his statements true. No other president in U.S. history has refused to release his tax returns when asked raising the one question that Trump avoided answering but always seems to come back to haunt him-what is our president hiding?
As it turns out, all those with suspicions regarding Trump’s motives were right to be so. A few days ago, an expose published in the New York Times revealed that the decade of 1985-1994 saw Trump lose over $1 billion in business deals that failed for various reasons. The tax return documents obtained by the New York Times did not just reveal many of Trump’s claims about his wealth and success in business as being false. They gave rise to a concern that Trump may be guilty of violating federal tax laws by failing to report the significant losses he suffered.. Trump has claimed that all his “relevant” documents are currently in the hands of the I.R.S. for auditing but it remains unclear what “relevant” means to him.
No President has so much speculation regarding crooked motives regarding personal financial documents since Nixon’s dealings with wealthy campaign backers drew unwanted attention. In 1973 Nixon released four years worth of tax returns. The Congressional Committee that reviewed them determined that Nixon owed nearly $500,000 in back taxes. In the decades that followed, this scandal was overshadowed by the events of Watergate but when House Ways and Means Committee Chairman Richard Neal (D-Massachusetts) brought forth a subpoena in an attempt to drive the process of Trump releasing his tax returns forward, the events of Nixon’s presidency again caught the attention of lawmakers.
State legislatures across the nation are taking action to ensure that their president is held to the same standards of transparency as other citizens when it comes to personal financial documents. Last month, bills were introduced in 18 states that if passed would require every presidential candidate as well as their running mate to release their individual tax returns before they could qualify for the 2020 election ballot, typically for at least the previous five years. The list of states to introduce such bills includes New York, Illinois and Washington with the recent addition of California. A strong advocate for politicians releasing their tax returns, California Governor Gavin Newsome has released his own and promised to continue doing so on an annual basis during his time in office.
Plenty of Trump’s Democratic challengers did not hesitate to release their tax returns despite the looming possibility that doing so could compromise certain cornerstones of their campaigns. When Sen. Bernie Sanders (D-Vermont) released his, it revealed the candidate who had built a movement preaching against America’s wealthiest class was himself a millionaire. The economic elite also now includes Sen. Elizabeth Warren (D-Massachusetts) who’s income combined with that of her husband, was over $846,000 in 2018. Both Sanders and Warren can chalk up much of their wealth to the sales of the books they have published since the 2016 election. Like Sanders, Warren has also built a campaign on policies that rely heavily on levying increased estate taxes on America’s wealthiest classes. Added to the list is California Democrat Kamala Harris whose tax returns revealed that her income in 2018 was roughly $1.89 million, though most of it was earned by her attorney husband. Though it may seem somewhat hypocritical for the Democrats running on platforms built on levying estate taxes and reducing economic inequality to be counted among the 1%, all such candidates have clearly recognized the bigger picture-that the complete transparency that they obtain by releasing their tax returns helps draw important contrast between themselves and the President they are trying to unseat.
There are several primary reasons why candidates such the 2020 Democrats should release their tax returns without pressure from Congress or the House of Representatives. The first is that doing so eliminates any conflicts of interests regarding who they are taking donations from. Plenty of Democrats, including Sanders and Harris have taken a stand against Super PACs funded by billionaires whose business interests could easily be linked to their generous donations. Suspected conflicts of interests regarding campaign donations are exactly what led to the secret that Nixon was trying to hide being discovered. Since Trump took office, the question of who truly helped win the election and who is influencing his administration’s policies has received almost more scrutiny than any other with voters suspecting everyone from Russian political figureheads to his billionaire backers.
By releasing their tax returns, the 2020 candidates who have done so have helped erase the notion that they are “working” for anyone besides the American people. Chris Kelly, director of Tax Policy at the notoriously right-learning Cato Institute went on record telling ABC News that none of the candidates who had released their tax returns as of April 17th 2019 were “ seemingly cheating or getting away with anything.”
The second significant benefit to releasing tax returns while on the campaign trail is that it clearly indicates how much each candidates has given to charity. For Democratic contenders to not be charitable would likely prove problematic for their campaign as many of their campaign primary policies center around levying taxes on the wealthy that are intended to fund social programs. Given what the public now knows about the personal finances of the candidates who are pushing for these policies, though, it would seem more important than ever for the 2020 Democrats to keep pace with giving generously. As of now, Warren has given the most of any candidates to charity, as she and her husband reportedly donated roughly 6% of their household income in 2018. Sanders, on the other hand, donated less than 4% of his household income although according to his campaign, the proceeds for his 2014 book The Speech were all donated to charity but the donation did not appear on his tax returns.
On the whole, it is clear that Trump’s consistent refusal to release his tax returns did nothing but present his opponents with an opportunity to distinguish themselves from him and prove to voters that they had no conflicts of interest. Those who have nothing to hide clearly have nothing to fear by disclosing their financial information as the candidates who were quick to disclose theirs have demonstrated. Some of Trump’s tax returns are supposedly still under audit and more details are likely to emerge as the election nears. That can’t be said for any of his Democratic opponents. The future is still uncertain but I can’t imagine any scenario in which the further scrutiny of Trump’s personal finances helps his chances of being reelected in 2020.
- Resistances Resources:
The Roosevelt Institute is a nonpartisan think-tank that produces research on matters involving economic policy and democracy.
- The Tax History Project is a research organization established by Tax Analysts in 1995 to provide scholars, policymakers, students, the media, and citizens with information about the history of American taxation.
- The Center for Economic and Policy Research is an nonpartisan think-tank dedicated to promoting democratic debate on the most important economic and social issues including economic and tax policy.
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As the 2020 race to White House progresses and the first presidential debates draw nearer, the candidates comprising the overcrowded democratic field continue to lay out more policies. Many of the economic policies presented by Democratic hopefuls have centered around an issue that, thanks to President Trump’s policies, democrats feel is ripe for reform-taxation. Many of the proposals involving taxes are directly linked to other policies that have formed the cornerstones of candidate campaigns.
Sen. Elizabeth Warren (D-MA) made many headlines when she rolled out a plan centered around making higher education more affordable. Under her plan, all tuition costs would be eliminated at every two and four year public college and university with additional $50 billion on aid provided to historically black colleges and universities. Warren also proposed a policy that, if implemented, would allow America’s buried in student loan debt with annual incomes below $100,000 to have $50,000 of their debt forgiven. Warren proposed paying for this plan, which would cost an estimated $1.25 trillion over a decade by implementing what she has referred to as an “ultra millionaire tax.” The tax would affect households with annual incomes of over $50 million and would involve a 2% tax on every dollar earned by each household over the $50 million threshold. For every dollar earned over $1 billion, the tax would be raised to 3%.
California Democrat Kamala Harris has proposed giving America’s teachers a 23% base pay increase, which would amount to roughly $13,500 per year. For teachers at underfunded schools with disproportionate student of color ratios, the raises would be higher. Harris has estimated that the ten year cost of this plan would be roughly $315 billion, a cost she intends to help cover by levying a further estate tax on America’s economic elite. According to Politico, her campaign is currently deciding how best to implement the necessary estate tax reform, considering options such as eliminating the current legal loopholes that have allowed Americans to altogether avoid paying any estate tax.
Other candidates seem more focused on workplace related matters Sen. Kristen Gillibrand (D-NY) has proposed the FAMILY Act, a plan that would guarantee paid leave from work of up to 12 weeks for both new parents and those caring for either ill or critically injured family members. The costs of such a policy would be covered by a payroll tax of 0.2 percent on the wages of each worker which would be divided between them and their employer.
Cory Booker (D-NJ) meanwhile, has focused on another problematic element-the racial wealth gap. His plan centers around providing savings bonds for all newborn babies worth $1,000 at the start. For babies born to low-income households, additional funds of up $2,000 would be provided. All such money would be kept in a low-risk savings accounts managed strictly by the U.S. Treasury Department. It has been estimated by Booker’s team that bonds given to children of low-income households could be worth roughly $45,000 by the time the children turn eighteen. Booker would cover the costs of this plan, estimated at roughly $82 billion per year, by curbing the estate tax exemption. His plan would include surcharges on all estates worth over $10 million, and prevent people reducing their capital gains on inherited assets, such as property and stocks.
Examining the policy proposals involving tax reform laid out by many 2020 democratic contenders, one theme immediately stands out-estate tax reform.
“Tax the rich” has long been a war cry among democratic politicians and voters but it certainly seems an opportune time for such legislation. The estate tax exemption system still has plenty of loopholes that allow America’s wealthiest and their decedents to avoid paying taxes on inherited wealth while the middle and lower classes struggle to pay theirs. Without these loopholes, the federal government would see an increase in tax dollars that would allow it to make significant strides toward repairing the loss in revenue and increased deficits inflicted by the tax policy of the Trump administration.
One of Senator Warren’s central arguments regarding her student loan forgiveness plan was that forgiving the majority of student loan debt would help spur economic growth. The evidence to support this claim is substantial. More than 44 million Americans are currently affected by student loan debt and when consumers are spending significant amounts of each paycheck on student loan payments, they aren’t spending as much as they could be on consumer goods and services. The Brookings Institute projected that more than 40% more borrowers were likely to fall dangerously behind on their payments by the year 2023. The looming crisis is likely to continue hindering economic growth if it is allowed to continue. Thinkers on the far right have argued that Senator Warren’s plan is unfair to those who have already repaid their loans but given how small that number is in comparison with those who are still buried in debt, it seems that the clear economic benefit of forgiving student loan debt outweigh the cost of doing nothing.
We cannot afford to ignore the economic benefits of Sen. Gillibrand’s FAMILY Act and Harris’ plan to increase teachers’ pay by way of implementing slight tax reform policies. Gillibrand’s plan would prove especially helpful for low-income parents, particularly mothers, who are forced to accept the financial burden of taking time off from their jobs for the birth of their children. Some women in such a situation risk losing their jobs altogether but are often faced with no alternative. It should also be noted that new parents are often faced with large bills so the loss of a second income can prove extremely problematic.
Harris’ proposal, meanwhile, highlights another important aspect of the American economy’s problems-that teachers are increasingly underpaid, particularly in low-income areas where public schools are underfunded.
We have some concerns about the economic implications of Senator Booker’s baby bonds plan. While the bonds that he wants to start awarding would likely prove an economic boon to the next generation, they do little to help our economy in the short term. The concept behind Senator Booker’s plan could almost be described as a double edged sword. While the positive attributes are quite clear, it will literally take eighteen years from the time the policy is implemented for them to materialize. In the time leading up to it, the U.S. will still be paying the price and unlike the plans laid forth by other candidates, they will do nothing to increase consumer spending and thereby spur economic growth for almost two decades. That will leave everyone else, including the parents of the baby bond recipients to continue struggling through an uncertain economy. While Sen. Booker’s plan is not without its positive aspects, it ultimately falls short of considering the economic growth factors that other candidates seem to have taken into account.
- The Tax Policy Center is a joint venture of the D.C. based think tanks the Urban Institute and Brookings Institution that provides expert research and analysis on tax, budget and social policy related matters.
- The Center for Economic and Policy Research is a nonprofit research organization that provides research on economic and social policy
- Bloomberg BNA is an online source for tax, accounting and legal information, research and analysis.
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President Donald Trump has spent his time in office in a twisted relationship with the Federal Reserve Bank, The Federal Reserve was established to be the guardian of our baking system, and to operate independent of political influence. However, President Trump likes to shape government institutions in ways that will serve his interests. This is hardly surprising, given his dislike of institutions in general, particularly those that do not immediately bend to his will without question
As of now, the Federal Reserve has two vacant seats on its board of governors who play an important role in how America’ s central bank conducts its business. Recently, Trump announced that he would be appointing two highly controversial figures to fill these vacancies. Failed Republican presidential candidate and pizza chain executive Herman Cain was his first pick, followed by economic commentator and far right talking host Stephen Moore.
There are significant reasons why these selections could raise eyebrows for those concerned about the traditionally independent Fed being swayed in a political direction. We will examine that in more detail in the analysis section of this report but as one might glean, the strong political affiliations of men such as Cain and Moore does not bode well for an institution that needs to remain independent and nonpartisan in order to properly do its job. Trump’s decision to nominate them was quick to garner opposition from both sides of the aisle.
Another aspect of Trump’s battle with the Fed is his feud over interest rates with its leader, Chairman Jerome Powell. Powell was appointed by Trump but unlike many of our President’s appointees in other government institutions, Powell hasn’t jumped at the chance to comply with his president. Recently, Trump called upon the Fed to cut interest rates, claiming that doing so would allow the economy to “take off” as he put it.
Adjusting interest rates remains within the power of the Federal Reserve , an institution that was created to operate without influence from the U.S.’ political system. President Trump has made it clear that he blames the Fed for hindering economic growth within both the U.S. and ultimately the global economy. If Trump’s history in the White House has taught us anything, though, it is that he is all too quick to blame just about anyone else for problems that can also be traced back to his own policies.
Despite Trump’s constant criticisms, Powell has insisted that the Fed is setting its monetary policy without any type of political influence and he has no intentions of resigning. While that may be true, we are still facing the prospect of our nation’s central bank being controlled, even in part, by figures who have strong ties to one political party. While neither Cain nor Moore are economists or bankers by trade, they are both talking heads for the GOP and supporters of Trump’s economic policies. Moore first made headlines in September 2018 when he published an article titled Give Trump the Nobel Prize for Economics. It certainly isn’t hard to see why Trump would want to put the man who believes so strongly in his economic policies in such a position of power when it comes to financial system regulation.
To do their jobs properly, the Fed’s board of governors need to be able to remain completely apolitical in their decisions. Can someone like Moore be expected to do that? He currently serves as the Distinguished Visiting Fellow, Project for Economic Growth, at The Heritage Foundation, an institution constantly hailed as one of the nation’s most influential conservative think tanks.
Trump’s selection of Herman Cain seems questionable for similar reasons. The former pizza chain executive ran for President in 2012 on the Republican Party ticket but he’s almost as well known for his attacks on the IRS, going so far as to call the American tax code the “modern version of slavery.” In Cain’s proposed “9-9-9” tax plan, the majority of our tax code would have been replaced with a 9% income and corporation flat tax. Both he and Moore have clearly demonstrated that they strongly favor the economic policies of the conservative parties and have never demonstrated the nonpartisan approach necessary for making regulatory decisions. Their appointment could easily serve to undermine Powell and help further President Trump’s economic policy agenda.
All this also serves to undermine the credibility of the Fed, a concept that could have further negative consequences for both the U.S. and global economies were it to intensify. Trump is not the first president to comment on interest rates and policies set by the Fed but he has made his bias more explicitly known than anyone before him. Many presidents have been hesitant to say too much regarding monetary policy as it can sometimes come across as trying to influence those who set it. Trump, however, has made no secret that he wants to influence monetary policy and he seems intent on doing what is necessary to remove obstacles that stand in his way. If Moore and Cain are allowed to take seats on the Fed’s board of governors, it will pose a serious threat to the system of nonpartisan decision making that gives the Federal Reserve its credibility. If it loses that, the Fed will not be able to properly regulate our financial system.
Better Markets is a nonpartisan research organization that works to promote the reform of Wall Street and the support the public’s interest in financial markets.
Americans for Financial Reform is a nonpartisan and nonprofit coalition of more than 200 civil rights, consumer, labor, business, investor, faith-based, and civic and community groups.
The Committee for Better Banks is a coalition of bank workers, community and consumer advocacy groups, and labor organizations coming together to improve conditions in the bank industry.
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Since he took office, Donald Trump has never shied away from touting the strength of his nation’s economy. He’s consistently described it as “booming” and often referred to it as the “strongest it’s ever been,” regardless of how much evidence points to the contrary. He’s never hesitated to focus on how much better off everyone is under his presidency from African-Americans to manufacturing workers..
Trump has always been quick to cite metrics such as low unemployment and high economic growth as evidence of his economy’s strength. If his economy is so strong, though, why isn’t Trump’s approval rating higher? While his rating may have risen one point, from 42% to 43%, it’s still down from the 45% it was at when Trump first took office. If economic growth has been as steady as Trump likes to claim, shouldn’t his approval rating be rising along with it?
A closer look might reveal that Trump’s policies on economic matters, haven’t actually been as beneficial to the typical American worker as he likes to think. If we take a look back through Trump’s presidency we can see a steady stream of policies and legislative decisions that have done much more harm than good for America’s workers. Congressional Republicans claimed that Trump’s Tax Cuts and Jobs Act that would help spur economic growth by increasing investment in American companies but as we saw, companies were more interested in buying back shares of their own stock than investing in labor. Trump later claimed the trade war that stemmed from his tariff policies would help corporations invest in more American labor but many factories dealt with the increased manufacturing costs by laying off workers or ceasing production all together. Earlier this year, the government shutdown caused significant problems for many federal workers who saw their wages frozen while Trump fought a battle with Congress that ultimately accomplished nothing.
While examining economic growth under Trump, we are faced with two overwhelming conclusions-that any economic growth we have enjoyed under the Trump administration has not been sustainable and that it has not reached America’s workers.
Trump will likely continue to lean on the metric of economic growth as the impending 2020 election draws nearer. Will this be a problem in his campaign? Experts say so. According to Mark Zandi, Chief Economist at Moody’s Analytics, Trump’s reelection bid will likely “live or die based on the economy.”
One issue that will likely play a key role in the economy’s near-future growth or lack thereof is trade. Trump has yet to broker a deal with China , leaving most of the world wondering what U.S. China trade relations will look like in the years to come.
Also any of Trump’s Democratic challengers could and should raise the question of why so many Americans are still struggling with healthcare bills as well as payday and student loans if the economy is truly as strong as Trump likes to claim it is.
This Post was submitted by USRN Policy Analyst S.O’Brient: Contact Sam@usresistnews.org
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By Samuel C. O’Brient
Private prisons have existed in the U.S. for years but under Trump, the stocks of two publicly traded companies, CoreCivic (NYSE: CXW) and GEO Group (NYSE: GEO) that make up the industry have surged. It isn’t hard to see why. The Trump Administration’s mass incarceration of immigrants and migrants has created the need for more prisons and immigration detainment centers, leading to the award of lucrative government contracts to the two companies that build prisons for a profit. It was estimated last year by S&P Global Ratings that of all immigrants currently detained by U.S. Immigration and Customs Enforcement, roughly two thirds are held in private detention facilities.
The private prison market braced for turbulence on March 5th when JP Morgan Chase, the world’s largest bank by assets, publicly announced that they would cease all financing of companies that operate within the private prison and detention center industry. The news raised plenty of eyebrows for people with ties to the private prison industry and for good reason. Despite the government contracts they receive, private prison corporations depend on Wall Street banks to finance their overall operations. Private prisons represent a small fraction of the bank’s overall dealings, but the past year saw the two aforementioned companies borrow roughly $1.8 billion from several banks, including JP Morgan Chase, Wells Fargo, and Bank of America
Both CoreCivic and GEO Group are considered Real Estate Investment Trusts by the Internal Revenue Service. While this means comes with significant tax breaks, it also means that they are required to pass off the majority of their income derived from real estate to shareholders.
How much trouble does JP Morgan’s decision mean for the private prison industry? As of now, it’s difficult to say but there can be little doubt that this new development will certainly shake things up.
While there are plenty of other banks who’ve made a habit of bankrolling private prisons, including Bank of America and SunTrust Banks, it seems likely that JP Morgan’s decision may spark a chain reaction. In January, when Wells Fargo released their Business Standards Report, they indicated that they planned on scaling back their involvement with the private prison industry for reasons involving “environmental and social risk management.” For a bank as embroiled in scandal as Wells Fargo, following JP Morgan Chase’s example might prove a worthwhile maneuver.
Aside from being an effective public relations strategy, divesting from the private prison industry seems to be well received by bank shareholders. Investors, both individual and institutional, have long been doing their part to strike back at the private prison industry by making sure that none of their capital goes towards funds with any ties to the industry. A significant involvement with the private prison industry could easily alienate investors with a focus on social responsibility, a growing trend through the financial sector. Organizations such as Real Money Moves have been created for the sole purpose of keeping money out of the hands of private prison companies, as have campaigns such as Corporate Backers of Hate and the National Prison Divestment Campaign launched by the NNIRR (National Network for Immigrant and Refugee Rights. JP Morgan Chase’s decision came after protestors confronted CEO Jamie Dimon at the company’s shareholder meeting and later rallied outside his Manhattan apartment. The driving forces behind these events included the Backers of Hate Campaign and the immigrant rights organization #FamiliesBelongTogether.
A recent report from Javier H. Valdés of Make the Road New York and Ana María Archila of the Center for Popular Democracy stated that the campaign will now shift its focus to banks such as Wells Fargo and Bank of America. Given everything we’ve recently seen from JP Morgan Chase, it seems entirely possible that other banks could follow suit. Targeting the private sector sources that private prison rely on has the potential to have dire consequences for the industry.
The months to come will be quite telling as to the fate and strength of the private prison industry. Many eyes will likely be turned toward Wells Fargo, a bank that would certainly be well served by an announcement that would please both shareholders and human rights activists.
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Trumpian Economic Policies Likely a Factor in Growing Bipartisan Support for ‘Tax-the-rich’ Policies
As President Trump continues his focus on securing funding for his border wall by any means necessary, some of the most influential democrats are working around the clock to help curb the damage caused by his policies by way of imposing new tax policies targeted at the nation’s economic elite.
Rep. Alexandria Ocasio-Cortez (D-NY) has discussed the prospect of returning to a marginal income tax of 70-percent while Sen. Elizabeth Warren (D-MA) wants to impose an increased wealth tax of 2-percent on households whose net worth exceeds $50 million which would be raised to 3-percent for those with a net worth over $1 billion. Sen. Bernie Sanders has proposed a plan would lower the estate tax exemption that American millionaires enjoy to the level it was at in 2007, a policy GOP members have dubbed the “death tax.” In addition, Sander’s plan includes an increase in the tax rate to a maximum of 65 percent for estates with a worth exceeding $1 billion. The estate tax has long been a focus for Sen. Sanders. His stance on taxing the estate’s of this country’s top 0.2 percent recently drew comparisons to Republican president Theodore Roosevelt’s iconic “New Nationalism” speech of August 31st, 1910.
The idea of taxing the wealthy is hardly a new concept. It has long been floated by democratic political leaders and talking heads, particularly in times of economic distress. In contrast conservatives have clung to the notion that increasing taxes on America’s wealthiest will hinder economic growth. The anti tax rhetoric that has become a staple of the modern Republican party’s economic agenda gained considerable momentum during the 1980’s when President Ronald Reagan began pushing the narrative that corporate tax cuts would spur economic growth. To his way of thinking, slashing taxes for corporations would allow them to expand and hire more workers, thereby creating wage growth for the middle and working classes and spurring organic economic growth that would allow these tax cuts to pay for themselves. Unfortunately, when this methodology proved faulty, Reagan was forced to raise taxes in other areas, ultimately a greater cost for the very people he and claimed that the tax cuts would benefit.
One of the primary concerns regarding these policies built around taxing the economic elite so far has been the effect it will have on voters. According to Brookings Institution’s Vanessa Williamson, though, these policies have faired fairly well with voters on both sides fo the aisle. As she states “Recent surveys confirm that there is remarkably bipartisan public appetite for the Democrats’ new proposals.”
It is hardly surprising that such policies would quickly garner support among Democratic voters, particularly with the way that the party has moved since Trump rose to power. Candidates such as Sanders and Ocasio-Cortez, whose rise in stature in the public eye has been helped by their steadfast focus on reducing economic inequality, have shaped the party and inspired a generation of voters who seem angry about the growing wealth divide that has only been aided by Trump’s economic policies. It should also be noted, though, that many conservative voters in rural areas have felt the effects of Trump’s flawed economic maneuvers, such as the farmers of the midwest and the factory workers of the rustbelt region and deep south who either lost their jobs or suffered considerable economic setbacks as a result of Trump’s tariff policies. Those voters have perhaps even more cause to be angry and to at least be open to the possibility of new policies that can help bridge the wealth divide.
On the subject of young voters, though, we should also not forget the millennial and iGen voters who will be playing a key part in the next presidential election. They won’t be looking at tax policies through the same lense as the generations of their parents and grandparents. These voters, for the most part, were never exposed to the mentality of Cold War era America when Reaganomics reigned supreme, an ideology built on pillars of anti-tax policies. These voters were shaped by the ideologies of thinkers such as Sanders, Ocasio-Cortez and Warren who have advocated passionately for reform and regulation regarding the world of high finance.
Politicians and business leaders on the right will likely continue their strong pushback against any talk of raising taxes for the wealthy, claiming such policies would hinder economic growth. A However there is much evidence that so-called a study by the However, there is much evidence that so called “trickle-down” economics does not work, including a recent a study from the Economic Policy Institute,
Democrats are not likely to stop pushing the narrative that corporations and our nation’s economic elite must be taxed and they aren’t likely to lose supporters over it. Donald Trump has done absolutely nothing to justify his tax cuts for the wealthy. If there were ever a truly opportune time to campaign for a tax on wealth in America this is it.
- The Economic Policy Institute is an economic policy think tank and conducts research and analysis on economic policies and proposals.
- The Tax Policy Center is a nonpartisan think tank that conducts research and analysis on matters involving tax, budget and social policy.
- The Brookings Institution is a a non-profit research organization dedicated to providing in-depth research on social policies.
This Brief was submitted by USRESIST NEWS Economic Policy Analyst Samuel O’Brient: contact Sam@usresistnews.org
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Brief #33—Economic Policy
After more the four long weeks, the longest government shutdown in the history of our nation has ended. This past Friday saw Donald Trump sign into a bill that would temporarily reopen the government and allow most furloughed American workers to return to their jobs. Backing down from his initial demands for additional government funding for his desired border wall, he accepted a deal that offered no funds for the wall. When the shutdown went into effect on December 22nd, the pushback from political figureheads on both the left and right was monumental but it doesn’t compare to anger of the 800,000 federal employees who were most affected. Forced to work without pay with their wages frozen, they began the year facing an economic future steeped in tremendous uncertainty.
Now that the shutdown has ended, at least on a temporary basis, the uncertainty hasn’t really subsided. Yes, plenty of federal employees are resuming working their positions but there’s still the possibility that in just a few weeks, the nightmare could continue. Democratic politicians refused to move forward with negotiations regarding the proposed wall unil the government had been reopened but as recent history has taught us, negotiations with our President can be unpredictable and erratic. It doesn’t help that multiple times, he threatened to declare a national state of emergency to procure the funding he claims to need. The most pressing economic concerns that have stemmed from the shutdown have little to do with funding for a wall and much more to do with the problems that arose from 800,000 employees being forced to work without pay, including members of the Coast Guard, Secret Service and air traffic controllers.
The financial woes that these federal employees encountered during the shutdown were well documented in the national media and not without reason. Thee many workers who saw their wages frozen were unable to spend on basic necessities, which quickly affected small businesses across the nation, particularly in industries such as food services and retail. A recent analysis from S&P Global Ratings indicates that the damage to our economy will add up to more than $6 billion in total, a larger sum the original $5 billion that Trump initially demanded for the wall’s construction. We should also not forget that when economic activity is severely reduced, as we saw during the shutdown, it can shave a significant amount off of a nation’s real GDP (gross domestic product) and this time is no exception. It has been estimated by the Congressional Budget Office that real GDP for the fourth quarter of 2018 has been reduced by up to $3 million.
The shutdown also resulted in another economic consequence that many news sources don’t seem to be paying as much attention. The payday loan industry has been steadily growing for years but during the shutdown, it saw a boom that should have worried everyone. Payday loans are essentially a debt trap. While they provide consumers with the quick cash that they need to take care of looming financial obligations, they ensnare them with interest rates that can be as high as 300% if not higher. This system may call to mind the subprime loan crisis in the early 2000’s when lenders prayed on low income borrowers with poor credit. Many financial advisors advised furloughed federal employees not to turn to these lenders during the shutdown, but for many workers struggling to make ends meet, they likely seemed to be the most sensible solution, particularly as for most of the shutdown, there was no clear end in sight, further adding to the aspect of economic uncertainty that continues to plague our nation.
Both consumers and markets share a mutual dislike of uncertainty in their economic forecasts. Now consumer confidence is down and with it, investor confidence. These two areas paired together are a dangerous combination for an economy that was already turbulent to begin with before the shutdown took hold. The shutdown may be over but the damage that it has caused will continue for the foreseeable future and likely for longer
- The Professional Services Council is an advocacy organization that has created a Government Shutdown Resource Center for furloughed federal employees.
- The American Foreign Service Association is an association of workers created to represent members of the U.S. Foreign Service that is providing information and resources for workers affected by the shutdown.
- The U.S. Office of Personnel Management (OPM) is an agency that provides resources and support to federal agencies and employees and is providing resources for furloughed workers.
This Brief was submitted by USRESIST NEWS Economic Policy Analyst Samuel O’Brient: contact Sam@usresistnews.org
Photo by Andy Feliciotti
Brief #32—Economic Policy
As the first week of 2019 comes to a close, the government shutdown shows no immediate signs of doing the same. Officially in its third week, the shutdown has progressed to the point that President Trump has stated that he may “declare a national emergency” if it continues. While government officials have confirmed that he technically has this power, it has also been acknowledged that such a measure would be extreme and would likely lead to further complications, not guaranteeing it would yield the results that Trump has proven he is so desperate for. According to Democratic Rep. Adam Schiff, such a tactic is ultimately faulty, as Trump would be unable to build the wall through national emergency declaration.
Since the shutdown was enacted, Trump has clung to his strategy of blaming the Democratic leaders for all problems that transpired since. Despite the $1.5 billion that was previously allocated for the wall, Trump seems insistent on sticking to his guns on his demand for $5 million plus. The general consensus among Democratic congressmen and women seems to be that the Wall is unnecessary and a waste of funds. As it stands now, the current state of our government can only be described as a standoff.
Meanwhile, things are growing progressively worse for federal workers. According to NPR, the shutdown has affected over 800,000 workers, many of whom are either being forced to work without pay or out of work completely. These workers are spread out among major federal agencies and departments, such as Homeland Security, Urban Development, Housing, Agriculture, and the Department of Treasury, among others. They account for roughly 1/4th of the federal government’s employees.
In the early days of the shutdown, economists indicated that it would likely not be too big of a deal for federal workers, provided it ended quickly. So far, though, the opposite has come to pass and as workers in different federal agencies, such as TSA and the National Park Service, are beginning to express anger at not being paid over a 3 week period. The affected workers are either working without pay or seeing their work time furloughed, amounting to many hours not being counted toward the country’s GDP. The suspended paychecks of federal workers across the nation are likely to stem further problems for the general economy. Things such as eating out, retail purchases, mortgage payments, doctors’ visits, and traveling are consumer purchases that help make the economy tick.
It doesn’t help that the government shutdown has come at a time when markets have been increasingly turbulent. Major stock indexes, such as NASDAQ, have seen dramatic declines. When combined with decreased consumer spending (see above), we are presented with a recipe for dramatic declines in investor confidence. This, in turn, can lead to a downward trend in 2019 first quarter economic growth. It was estimated that economic growth would be slow before the shutdown but now things may be worse.
- The National Day Laborer Organizing Network is a non-profit organization dedicated to protecting the rights of day laborers across the nation.
- The International Labor Rights Forum is a non-profit advocacy organization dedicated advancing the rights of workers throughout the global economy.
- Labor Notes is a non-profit organization and network for union members and grassroots labor activists.
This Brief was submitted by USRESIST NEWS Economic Po0licy Analyst Samuel.O. Brient: contact Sam@usresistnews.org
Photo by Andy Feliciotti
Brief #30—Economic Policy
This past week saw automotive giant General Motors (GM) announce it would be closing its Lordstown Ohio plant, as well as four others, in an effort to reduce costs. The effects of this decision will include the loss of 15% of the company’s salaried workforce, totaling over 14,000 manufacturing jobs. The workers who will be left unemployed likely remember the promises that President Trump made to the workers of their industry, specifically that no automobile manufacturing jobs would be lost and rather, more would be created. Like so many of his promises, though, it has been proven hollow.
In spite of all this, it would appear that the workers being outed from the Lordstown plant are remaining steadfast in their support of Trump. According to multiple sources, GM county is seeing numerous workers blaming “corporate greed” for the layoffs and refusing to consider any Trumpian policies. The evidence that his administration’s tariffs have had negative effects on all of America’s leading auto manufacturers is undeniable but many GM workers have refused to consider them as a possible nail in the coffin of their factory jobs. GM has tried to attribute the drastic cost-cutting measures to changing consumer demand and while that has certainly played a part in it, the increased production costs that stemmed from Trump’s tariffs on aluminum and steel cannot be ignored. More than ever, the consumer voters of the rustbelt region of the midwest have demonstrated their commitment to the President they voted for.
During the recent Midterm elections, multiple Democratic Senatorial candidates in red states attempted to leverage the effects of President Trump’s trade war as a method to sway his supporters. This tactic made sense, particularly as in many red states, the economy is likely driven either by agriculture or manufacturing. It is not surprising that Democrats would express concern for the state economies who have felt the effects of the trade war in worse ways that those in urban areas. These candidates included Senators Claire McCaskil of Missouri, Joe Donnelly of Indiana, and Heidi Heitkamp of North Dakota. Both Heitkamp and Donnelly cited the certain tariffs that kept their state’s farmers out of important global trade markets while McCaskil raised the popular example of the Mid Continent Nail Co. in Poplar Bluffs Missouri, a factory about to be forced to close its doors due to Trump’s tariffs on aluminum and steel, the same policies that have wreaked havoc on the automotive industry.
All three candidates, though, were defeated by fairly large margins. These regions included plenty of voters whose jobs have been lost since the start of the trade war but remain unmoved by the evidence against their president’s role in the loss of their jobs.
Since the start of the trade war, Trump has pushed the notion that any pain the American people have been feeling in the short-term will ultimately give way to longer-term economic gains. It is more clear than ever that his supporters are willing to suffer through the considerable economic turbulence caused by tariff after tariff despite the evidence that there are no long-term economic gains in sight. Everything from the recent declines in the stock market to the numerous factories closing their doors and cutting low and semi-skilled jobs has indicated that the U.S. economy is far from healthy.
Those with careers in the industry of agriculture should know this better than anyone, particularly those whose chief export is soybeans. Farmers in North Dakota have reported considerable declines in demand for soybeans on the part of the Chinese, one of their primary consumer markets. Even so, 93 percent of the state still supports Trump, who did not hesitate to emphasize the problems caused for farmers by the retaliatory tariffs implemented by China, despite the fact that they were prompted by his own policies.
As problematic as the trade war has proven for red states across the American South and Midwest, it is not the only factor contributing to their economic difficulties. Regional economies across areas such as the rust belt region of the Midwest were struggling for decades before Trump took office. His policies have done plenty accelerate already problematic elements, though, particularly job loss in rural areas. Politico has dubbed this phenomenon the “geography of opportunity,” referring to the trend of people with resources fleeting rural areas and migrating to more urban ones in search of economic opportunity. This migration has caused coveted opportunity and innovation to stay confined to cities and already prosperous suburban areas.
This trend is problematic for a number of reasons, particularly for the overall economic prosperity of our nation. President Trump has done little to help and what he has done, such as doling out $12 billion in government aid to farmers affected by the trade war, has not yielded the necessary results. There are several key policies, though, that might help spur innovation and economic development in rural areas.
Firstly, we should focus on expanding funding for startups and finding new ways to incentivize entrepreneurs and capitalists to build companies in less populated areas. Perhaps a tax break for new companies built in such areas would be more effective than the tax cuts that President Trump granted prominent corporations who are doing more to eliminate American jobs than to create more. A tax break such as the one proposed would likely help draw investment capital to struggling rural and areas and ultimately spur the economic development that such places need.
We should also be rethinking our policies regarding infrastructure. Healthy infrastructure and transportation systems can greatly benefit both public health and regional economies which both contribute to a healthy U.S. economy. The only national focus on infrastructure, though, seems to be in urban areas and densely populated cities. Any solutions that have worked in New York, Los Angeles or Chicago will likely not work throughout the rustbelt region or similarly rural areas. Another problem has been the nature of infrastructure discussion has often swung towards prioritizing special interest groups without giving thought to the real problem of workers who are often unable to relocate to a different area in search of better work. Discussions on infrastructure should cast an eye toward restructuring policy around the needs of America’s workers. In the struggling communities in these areas, though, we often see resources that are not completely developed. All this calls for the need for policies to spur economic development in such places. The right sort of legislature could bring both jobs and positive changes in infrastructure.
The conservative strongholds of the midwest and deep south are seeing even less economic development than their northern counterparts, despite their seemingly undying faith in a leader who has failed to deliver on his promises to them. The economic solutions that their communities need to thrive again are not out of reach by any means but until they refocus their priorities and recognize what is necessary, nothing is likely to change.
- Our Ohio Renewal is a nonprofit organization created to help promoting discussion on matters including economic development in rural Ohio.
- The International Economic Development Council is a nonprofit organization dedicated to helping economic developers and promoting development projects.
- The Appalachian Regional Commission is a United States federal-state partnership that works with people of the Appalachian regions to create opportunities for self-sustaining economic development and improved quality of life
This Brief was submitted by USRESIST NEWS Analyst Samuel O’Brient: Contact: email@example.com
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