The Curse of Trump Is in Cutting Back on the Poor

This article was first published on my Talkmarkets personal blog:

The low GDP numbers we have are a concern, because the lower growth is, the harder it is to sustain social programs. However, as the chart shows, the United States is not exactly in its worse place when it comes to debt to GDP levels:

The Trump administration and the pundits who are likely paid to share his stories are all saying this is safety net unsustainable. Certainly, 2017 GDP has started out poorly at 0.7 percent for the first quarter. And that is a concern. But what if that is more an observation about how Trump has impacted Americans than about anything else? Maybe Trump is a recession in the making!

And Trump wants to pass the potential savings gained from the backs of the poor to wealthy people. That makes no sense at all as capital already has been winning versus labor. Keep destroying labor and you will bring on a recession. Then, will the government respond to a deep recession by extending benefits with Trump as president?

He could deepen any recession that occurs.  The Fed could have to be on its game to overcome Trump.

It is easy to cut the benefits to the poor. They have no influence. I don't think this means that cutting benefits for older Americans is right either, but maybe you could chip away at deficits somewhat, for bigger programs without hurting the constituents:

"Analytically, you do have to make hard choices," MacGuineas said. "I think this is a huge illustration about why being unwilling to talk about the real issues -- Social Security and Medicare and taxes -- means you then you end up gutting all these programs for low income people." 

Of course, more sane heads in congress will hopefully prevail, and they could realize that most Americans don't want food stamps cut in order to give wealthy people tax breaks. The idea that Trump is going to get people to go find a job seems wrongheaded, as the termination of unemployment benefits was the catalyst for finding jobs. It was a good thing some people were hiring and the labor market is far tighter now than it was in the Great Recession.

Yes, there are problems with the economy, but making poor people poorer in one of the wealthiest nations in the world is not the answer. In fact, it may be a curse. Lots of people think that the city of Sodom was destroyed by fire because it was morally corrupt. But the prophet Ezekiel proclaimed:
"Behold, this was the guilt of your sister Sodom: she and her daughters had arrogance, abundant food and careless ease, but she did not help the poor and needy...
 We see this warning from Proverbs:
He who oppresses the poor taunts his Maker, But he who is gracious to the needy honors Him.
And we even crush foreigners in our land, especially illegals. But there is a warning about this from Moses as well:
"You shall not oppress a hired servant who is poor and needy, whether he is one of your countrymen or one of your aliens who is in your land in your towns.
Old Israel had forgiveness of debt, jubilee. The new globalism refuses to forgive anything to anybody. Look at poor Greece, the poster child for empire-behaving-badly, and Puerto Rico, which once offered big tax breaks to Big Pharma, until congress took them away, decimating the economy.

Even the US forgave German debt at the end of World War 2 and yet Germany may not ever give an inch when it comes to Greece.

In the US, Wall Street has entered the housing market, and there are excesses of greed in how the average guy in the street is confronted with the new rental reality.

We see Amos the prophet weighing in on gouging people when determining and collecting rent:
Therefore because you impose heavy rent on the poor And exact a tribute of grain from them, Though you have built houses of well-hewn stone, Yet you will not live in them; You have planted pleasant vineyards, yet you will not drink their wine.
If we look at rents, we can see that the passage above is clear. Rent should be charged based on income, below a certain threshold. In some cities, poor could mean under 6 figures. So, it is not just Donald Trump who is engaging in breaking the backs of the poor. It is the investor class that is breaking the backs of the poor.

When it comes to rent and especially home ownership, the middle class in San Francisco may be at the $250,000 level that Mitt Romney suggested. Only he had no plans to help those who made less.

It is a nationwide epidemic, an investors' epidemic of speculation. And some of it is based on sound economics, but that does not matter.

Truth is, we are flirting with danger as a nation. We are pushing the envelope. Our wealthy and big corporations are hiding money from the tax man. Our wealthy are laughing at the poor. They are laughing like George Romney did.

Donald Trump has much the same mentality as does Romney. I am telling you, we need to think this through and we need to stop what we are doing and change. Otherwise, outside forces could impact our civilization in a highly negative way. Wall Street simply must get out of the housing game.

In case people forgot, there is a transcript of Romney's secret speech. Besides saying the 47 percent would not vote for him, he also laughed when he said he was poor as a church mouse. Maybe he was comparing himself to Bill Gates or maybe he was a cocky and insensitive elite.

But don't worry, both parties have sold out to the bankers, and while we need easier money, we need patient lenders. Our big banks, and the shadow banks they may fund, are not patient lenders. We need replacement banks who would show patience on loans made that were pricey and speculative.

So, fixing the housing debacle in wealthy cities does not mean just building more market based housing. That won't do it. According to the Washington Post, more needs to be done, and here is a controversial solution:

To be sure, more supply is needed, but unless it is targeted to those who need it most, it will only help wealthier residents. To truly expand affordable housing in California, we need innovative policies that move beyond the limited existing programs. The most promising programs would provide direct subsidies to create permanently affordable housing and incentivize developers to include affordable units in their buildings. Even taking land permanently out of the market with land trusts should be on the table. We understand which mechanisms will work. The real question is whether we have the political will to overcome local opposition to new development and to change policies, like the mortgage interest deductionthat currently do more to subsidize middle-and high-income homeowners than struggling low-income renters.
San Francisco’s housing affordability crisis is front and center of nearly every news cycle. Rents and housing sales prices are through the roof. Longtime low- and middle-income residents are experiencing pressures to leave San Francisco like never before. Employers of all types – restaurants, tech companies, coffee shops – are struggling to hire quality staff because it’s become so hard to afford life in San Francisco. 
In closed access cities, cities where it is difficult to move to, the upward spiral of rent and wages is not the classic inflation. Most goods and services have not been inflationary, and some, like energy, have declined in price since 2011. But if it all goes up at the same time, watch out. As long as salaries go up faster than rents, the middle classes can still survive but the poor will suffer.

But is that sustainable? If things get bad enough, this could happen and it was truly a curse for landlords at the time of the Great Depression, according to Mitch Stanley:

I was talking with a woman who volunteered that during the Depression in 1929, her Great Grandfather had ~10 SFH that he rented. Regrettably, people could not afford the Rent.she said , and he Lost all of his SFH in the area.
The United States is still a wealthy nation. It had better not mock its Maker, at its own ultimate peril. If its Maker is not happy with the United States, you can imagine how He feels about globalization and world order empire that seemingly can flaunt local and federal law and get what it wants.


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