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My Turn/Bill Plumley: President Trump is a snake-oil salesman

  • PLUMLEY



Wednesday, March 21, 2018

Donald Trump cannot be trusted. He has been an effective salesman. Unfortunately, he is selling snake oil to the public. Buyer beware! The most important characteristic a leader can have is credibility to instill trust in them.

I don’t believe Mr. Trump has any credibility, since I have seen significant and obvious differences between what he promises and the agenda he promotes with his directives, executive orders, and signed legislation. As a candidate, he portrayed himself as a different type of Republican, one who would attack the financial industry (Wall Street), govern independently of wealthy special interest groups, and protect the programs that the poor and middle class depend upon.

There are numerous examples of Donald Trump misleading the public or lying about his true objectives. I want to point out just a few.

Mr. Trump and the Republicans promised a tax bill that would stimulate the economy, provide tremendous relief to the middle class, and simplify the tax code. In December, Donald Trump signed into law a $1.5 trillion tax bill that gives corporations a massive permanent tax break, only temporarily cuts rates for individuals and repeals the Affordable Care Act’s individual mandate, a move that is estimated to leave 13 million fewer insured over the next 10 years. The bill lowers the corporate tax rate from 35 percent to 21 percent, gives pass-through businesses (S corporations and LLCs) like the Trump Organization a 20 percent tax deduction, and lowers individual rates across the board. It is a bill that, by almost every official analysis, overwhelmingly benefits America’s highest earners and doesn’t do much to simplify the tax code.

Even in the first years of the new law, the benefits are concentrated among the upper-middle and upper class in 2018. The average tax benefit for the taxpayers in the upper 1 percent category is $193,000 while the average benefit for the middle 20 percent is $930. I don’t think that fulfills Trump’s promise.

The reduced corporate rate will not have a significant effect on the economy or corporate investment. The reason is that large corporations will use the extra cash to initiate mergers and acquisitions, stock buybacks, debt repayment, and increase dividends to shareholders. All of these transactions benefit the investor class, which is a tiny minority by all standards. There will not be a “trickle down” effect as proclaimed by the Trump administration to the average citizen. Forty-two of the top economists in the country attest to this interpretation.

Many of the recently announced capital spending plans and employee bonuses were already in corporate budgets. The tax cuts will increase the federal deficit by over $1.3 trillion over the next 10 years, which will lead to higher interest rates and eventually lead to a slowdown in the economy. As a result, the increase in the deficit will restrict our ability to invest in infrastructure and jeopardize the funding for Social Security, Medicare and Medicaid. What happened to his promise of a balanced the budget?

Trump also promised a better approach to health insurance coverage at more affordable prices than we had under Obamacare. However, the repeal of the health insurance mandate will drive up the cost of health insurance. To date, despite years of Republican complaints over Obamacare and Trump campaigning on the idea he could come up with a better plan, there is no evidence or proposal of any new comprehensive plan with good coverage.

And, Mr. Trump criticizes companies for not hiring Americans as well as criticizing the visa programs. At Mar-a-Lago, he hires Haitian workers under the visa programs and pays them $10 to $13 an hour.

Do you remember Donald Trump saying he wouldn’t be influenced by special interest groups, the wealthy or include the “Wall Street people” in his administration? Over 100 lobbyists have been named to federal agency positions. Just outside of the administration, many lobbyists have set up shop while spending $1.67 billion on lobbying. Also, two Wall Street people were appointed to Cabinet positions, Wilbur Ross is Secretary of Commerce and Steve Mnuchin is the Secretary of the Treasury. Donald Trump also received $30 million from the NRA to support his campaign.

The snake oil is still being sold. Buyer beware.

Bill Plumley is a resident of South Deerfield and a retired CPA and financial consultant.