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Taming Trump (print)

The following is a forthcoming article expanding at length on how US elites are maneuvering with the Trump administration and transition team, compromising in the short run but preparing in the longer to ‘tame Trump’ by various means should he depart too radically from mainstream elite policies. The piece is offered here to readers, despite its length more appropriate for a magazine than a blog.

Taming Trump, by Jack Rasmus, copyright 2016

“In the weeks since the November 8 US presidential election, the dim outlines of what a Trump presidency might look like are beginning to appear. Trump continues to retreat on several fronts from his campaign ‘right populist’ positions, while doubling-down on other radical positions he previously proposed during the campaign. How to make sense of his apparent evolving policy divergence?

One the one hand, Trump appears to moving closer to traditional Republican party elite positions on big reductions of taxes on corporate-investor elites and on delivering long standing elite demands to deregulate business; at the same time he appears to be moderating his position with regard to that third top priority of the US neoliberal elite—i.e. free trade—as he back-peddles rapidly from his campaign attacks on trade and free trade agreements.

At the same time Trump appears to be doubling down on his campaign’s radical social policy issues like immigration (promising to immediately deport or jail 3 million), taking a harder line position on law and order and civil liberties (declaring those who burn the flag should lose their US citizenship or go to jail), reaffirming his intent to privatize education services (by appointing a hard liner as Education Secretary who strongly favors charter schools and school vouchers), attacking environmental programs and protestors (calling for restoration of the Keystone pipeline), while showing early signs of moving closer toward Congressional Republican elite leaders, like Paul Ryan, and Ryan’s radical proposal to replace current Medicare with a federal ‘voucher’ system that would freeze the amount Medicare would pay doctors and hospitals as health care costs continued to escalate.

Areas Still Vague: Infrastructure Spending and Foreign Policy

Less clear than Trump’s above policy bifurcation are what policy positions he will take on fiscal and monetary matters.

Trump campaign promises of more government spending on ‘infrastructure’ still remain too vague. Will that mean more oil and gas pipelines and coal mining? More tax cuts to construction companies? More direct subsidies to businesses? And how much ‘spending’ is involved? Early indications are the infrastructure program may be mostly tax credits for businesses—and in addition to his massive corporate-investor tax cuts also planned. Trump in the past has called for $1 trillion. (Clinton had called for a $250 billion program over five years. That $50 billion was just about the amount the US now provides in subsidies to agribusiness). And so far as infrastructure spending’s impact on the US economy, $50 billion a year is insignificant. $1 trillion and $100 billion a year over ten years, Trump’s campaign proposal, might have some effect on US GDP. But GDP growth does not necessarily translate into benefits in income to all—as the last eight years has clearly shown as 97% of all GDP-income gains under Obama have gone to the wealthiest 1% households. Nor will infrastructure spending likely translate much into job creation—and could especially result in little positive impact on jobs if infrastructure spending is composed mostly of tax cuts, business subsidies, and high capital-intensive projects that may take years to realize. It is highly unlikely Trump is talking about a 1930s-like ‘public works program’. It’s more likely to be the federal government writing checks to big construction companies, pocketing nice profit margins in the process.

Trump’s influence over monetary policy in general—and interest rates in particular—will be even more minimal. The US elites will strongly oppose any Trump attempts, as promised during the election, to ‘reform’ the US central bank, the Federal Reserve. And the Federal Reserve’s interest rate hike cat is already out of the bag. Long term rates have been already rising rapidly and will continue to do so, as will the US dollar in turn, as the two—rates and the dollar—are highly correlated. And the Federal Reserve is clearly on track to raise short term rates soon.

The question is whether the rise in interest rates—short and long term–will discourage investment, thus hiring and job creation, in those industries not directly affected by infrastructure spending? Will the negative effect of rate rises on investment and job creation be greater than the positive effect of infrastructure spending? Will those negative effects emerge sooner than the positive from infrastructure investment? And will the rising dollar associated with the rate hikes further reduce manufacturing exports and jobs in that sector? The dollar rise has already stagnated manufacturing output and employment. Further increases will almost certainly result in a contraction of manufacturing exports and jobs.

‘Yes’ is probably the answer to all the above, which means Trump job creation net effects during his first two years in office may not materialize. Moderate at best job creation from delayed infrastructure spending could be more than offset by job loss from rising rates and the US dollar.

The other major Trump policy area that still remains vague is foreign policy. It is not clear as yet what Trump’s true positions will be on NATO and China. But the US elite are intent on bringing him around to their positions and will exert extreme pressure on Trump in order to do so. They have already begun to do so. They will not let up on the pressure.

Trump’s intent is to become more militarily aggressive against ISIS in the middle east, and possibly ‘partnering’ with Russia to do so. That latter possibility is currently causing fits with US elites behind the scene. Backing off from NATO military deployment provocations in eastern Europe, the US-NATO current policy, while looking favorably on Europe’s backing off of economic sanctions against Russia, may also become Trump policy.

Trump’s Big Three Cabinet Appointments

Whether that foreign policy redirection occurs under Trump is now playing out in backroom maneuverings within the Trump administration with regard to key Trump cabinet appointments involving departments of State, Defense, and remaining national security positions. The elite want Romney. Populist right forces in the Trump camp do not. And behind the appointment issue is whether a Secretary of State position under Trump becomes a mere figurehead to Trump foreign policy decided in the White House by Trump and his close aides like General Flynn and others.

The US elite want Romney and they want their Secretary of State to have independence. Should Romney get the appointment here, it will signal they have prevailed. The result will be a bifurcation on foreign policy directions in the Trump administration which will ultimately break down at some point.

Obama’s recent ‘tour’ of NATO countries should be viewed as an effort by US elites to try to ensure NATO allies that Trump’s campaign proposals targeting NATO will not be the final position of the Trump regime. The Obama tour was in part at least to hold NATO allies’ hands and ask them to be patient—i.e. the elite will bring Trump around to reality. Be patient. We will eventually ‘tame’ Trump is no doubt the message. After Europe, Obama scurried back to Asia, attending the APEC economic summit, and providing no doubt similar assurances to US allies there that Trump would ‘come to his senses’ as cooler elite heads advised him.

Trump appears to have just appointed General (nicknamed ‘mad dog’) Mattis. Petraeus, a more establishment figure under consideration is out; or maybe Petraeus decided himself that hitching a ride on a Trump administration was not the greatest career restoration move. But the Mattis appointment still leaves the direction of a Trump administration’s policies on NATO, Russia, or Asia up in the air.

The third key cabinet appointment is Secretary of the Treasury. Here Trump’s transition team initially appeared to favor the CEO of the biggest US bank, Chase’s Jaime Dimon. Treasury secretaries in recent decades, under US Neoliberalism since Reagan, have always been heads of some big financial institution. And in recent decades, the Treasury Secretaries have repeatedly been alumni of the big investment bank, Goldman Sachs. And so too is Mnuchin, continuing the trend of the wheeling-dealing ‘shadow banking’ sector still dominating the Treasury.

Together with Wilbur Ross, appointed to Commerce Secretary, also a ‘shadow banker’ and former Private Equity Firm owner, the Mnuchin-Ross team will determine banking and economic policy in the Trump administration. Their initial target will no doubt be dismantling what’s left of the skeleton of the Dodd-Frank banking regulation bill.

Trump ‘Free Trade’ Policy

Trade as a policy has both foreign policy and economic dimensions. The US elite is now facing a major challenge, having temporarily lost the TPP and with the Europe TTIP in trouble, given a year of intense political instability on the horizon in Europe. They will focus on just keeping the prospects alive temporarily. In the meantime, the thrust is to prevent the deterioration of NAFTA, CAFTA, and other bilateral free trade deals signed under Bush and Obama. The objective will be to stop Trump from making any changes in NAFTA in the short term, and ensuring whatever changes after is cosmetic and token in the longer term.

Taming Trump may prove more difficult with regard to Free Trade, however, compared to getting Trump to implement US elite objectives on matters of tax cuts and deregulation. Trump’s positions during the election were strongly anti-Trade. It played a key role in his election victory, and clearly in the key states of Pennsylvania, Michigan and Wisconsin. It will be more difficult for him to renege and about-face on the trade issue. Taming Trump will prove more difficult.

But here’s how it nonetheless may develop:

Reversing the worst effects of NAFTA cannot be done in the short term. The elites have many ways to slow and block his efforts. Some token renegotiation of NAFTA will eventually take place, resulting in minor adjustments. In the meantime, however, Trump can gain publicity and placate his base on this issue by achieving ‘victories’ discouraging specific companies to abandon plans to relocate to Mexico or abroad. Recent events involving Ford Autos and the Carrier company are examples of what may be the Trump short term policy direction with regard to trade.

As for other multilateral free trade treaties, Trump has declared he would stop the TPP, Transpacific Partnership Asia-US free trade deal. But that was already dead in Congress. And the US-Europe counterpart to the TPP, the TTIP, is impossible in 2017 with the accelerating upheaval in European politics and coming unraveling of the Eurozone after next week elections in Italy and Austria, and with elections in France, Netherlands and Germany on the agenda in 2017.
What will Trump’s longer term free trade policy look like? It is important to understand that Trump is not against free trade. He opposed multilateral programs, which were at the center of US neoliberal elite objectives. Trump’s free trade policy will be to negotiate country-by-country free trade deals. Renegotiating free trade will make it appear as if he’s dismantling it. But the process will take a longer time, certainly not in the first year or two. The US elite can probably live with that. Their task in ‘taming Trump’ is to ensure he does not take precipitative action against current free trade deals, that he puts off such action, and settles into a longer term bilateral renegotiating policy. In the meantime, it will be more highly visible personal actions like the Ford and Carrier deals, to make it appear he is doing something on the matter.

What that all means is that except for token company examples like Ford and Carrier, free trade deals will continue. The US elite will get to continue their Neoliberal policy priority of free trade, just in another form that emphasizes slow, token changes to existing agreements and bilateral new free trade agreements. But free trade bilaterally is still free trade. And job losses and wage compression, the two major consequences of free trade deals, will continue. It’s just free trade in another form.

Trump is betting that the lack of job creation, from a retreat from is promises to ‘bring back jobs’ lost to trade, will be offset by job creation from infrastructure spending. Meanwhile, he can and will claim he is saving jobs by talking down Ford, Carrier, and other companies. Alongside this, bilateral free trade deals will go forward.

Massive Tax Cuts and Business Deregulation

The other two major priorities of the US elite are big corporate-investor tax cuts and deregulation. Here Trump has signaled he is in full agreement with the elite. No need to ‘tame’ Trump here. These policies will be forthcoming almost immediately in the new Trump regime.

Trump has proposed to cut corporate taxes even more than the Ryan-Republican Party faction in Congress. From the current 35% corporate rate, Trump proposed reducing it to 15% while Ryan and friends to 20%. Both are in agreement to reduce the top income tax rate for their wealthy friends, from current 39.6% to 33%. The Capital gains tax, now 23.8%, is scheduled for a cut to 20% by Trump and 16.5% by Congress. Both Trump and Ryan plan to abolish the Estate Tax, reducing taxation on estates worth $7 million (now the threshold) altogether. Both are strong proponents of allowing big US multinational corporations in Tech, Pharma, Banking and others to ‘repatriate’ $2.5 trillion in taxes they have been hoarding in profits offshore to avoid paying the US 35% rate to a low of 10%. The 4.8% surtax on the wealthiest to help fund Obamacare will also certainly disappear. Also notable is that net taxes on the middle class will rise under both plans, and the countless loopholes for investors will continue.

It should be noted that this massive tax cut package amounts to $4.3 trillion, according to Trump. But according to the Tax Policy Center research group, it will reduce federal revenues by $6.2 trillion. The wealthiest 1% would realize a 13.5% cut in their taxes, while the rest of all households would have a 4.1 % rise in their taxes.

This $4.3 or $6.2 trillion follows a $5 trillion tax cut agreed to by Obama, Democrats and Republicans in Congress that took place in early 2013 as part of the then phony ‘fiscal cliff’ crisis. That followed a $800 billion tax cut pushed by Obama at the end of 2010, in which Obama continued the previous Bush tax cuts for another two years and then some. That followed a preceding $300 billion tax cut in Obama’s 2009 initial recovery program. And all that came after George W. Bush’s estimated $3.4 trillion in tax cuts in 2001-04, 80% of which accrued the wealthiest households and businesses. So under Bush-Obama, taxes for the rich and their corporations totaled approximately $9.5 trillion, and now Trump-Ryan propose another $4.3-$6.2 trillion minimum, running the total up to more than $15 trillion.

And corporations and their lobbyists won’t wait for the tax cut legislation. They are already pressing for a Trump reversal of Obama administration measures over the past year to slow the rampant ‘tax inversion’ scams by big multinational tech, pharma and banks, that have been avoiding taxes by shifting their company headquarters offshore on paper. Corporations have avoided paying hundreds of billions of dollars in US taxes in just the past three years by means of ‘inversion’ scams. Trump doesn’t have to wait for Congress, for him to open the floodgates allowing massive corporate tax avoidance through unlimited ‘inversions’ once again. Big business lobbying arms, like the Business Roundtable, American Bankers Association, and National Association of Manufacturers are reportedly already demanding Trump lift all restrictions on ‘inversions’.

Trump and Ryan-Congress are no less in synch on the third policy priority of US elites—deregulation. Like corporate-investor tax cutting, Trump and the US elite are on the same page when it comes to deregulation. High on this agenda will be slicing the Affordable Care Act (Obamacare). Trump will not need to repeal it and won’t. It will be given a ‘death by a thousand cuts’ and allowed to collapse. Already in big trouble as a program unable to control health insurance costs or prescription drug price gouging, ACA provisions like mandatory insurance purchases and the 4.8% surtax on the wealth to help pay for the subsidies are likely to go quickly. A similar major deregulation will be the Dodd-Frank banking regulation act, which has already had much of its provisions defanged since its passage in 2010. A main target will be the Consumer Financial Protection Agency.

To gain public awareness of his pledges to deregulate, Trump will immediately in 2017 repeal, however, as many Obama Executive Orders as possible. Receiving the brunt of this will be immigration provisions, like the Dream Act, and numerous Environmental regulations. Trump’s EPA head will no doubt immediately reverse the regulations involving the industrial plant pollution proposals not yet or just recently proposed. In Labor matters, overtime pay rules and private pension rules are targets as well. Trump will immediately in 2017 reverse all the regulations he possibly can by Executive Order. That includes the Dream Act for youth of immigrants in the first 100 days, and new Executive Orders giving new powers of detention and arrest to border and police officials. Efforts by cities and universities to provide sanctuary to undocumented immigrants will result in immediate harsh financial and other actions against those same. Recent minimal rulings by the National Labor Relations Board favoring union workers and institutions will be quickly reversed as well.

The US elite, in Congress and beyond, will tolerate much of this deregulation, as well as a significant assault on immigration, law and order, policy repression of ethnic communities, deportations, limits on civil liberties, cuts in social programs, and privatization proposals across the board involving education, Medicare, and healthcare. Their priority is passage of policy in the areas of tax cuts, deregulation, and delaying any potential actions that might endanger existing free trade agreements.

Getting Trump to back off his campaign promises—i.e. his right wing populism—in areas of foreign policy and trade redirection are also elite priority issues. Trump has never needed ‘taming’ on tax and deregulation issues. And he will be allowed to proceed with elements of his right wing populism that involve attacks on environment, law and order, civil liberties, and immigration—so long as the latter involves low paid undocumented immigration from Latin America and does not interfere with the 500,000 high paid tech jobs legally given to Chinese and Indian immigrants on H1-B and L-1/2 visas. And so long as he doesn’t proceed so fast that it precipitates excessive social unrest. Go slow, he will be told. Nothing too extreme. And ensure that taxes, deregulation, trade and foreign policy are priority and are concluded first.

The US elite will abandon Trump if he doesn’t play ball on taxes, deregulation, going slow on Trade, and if he upsets long-standing foreign policy directions too radically. They will let him run amuck on issues of immigration, civil liberties, law and order, environment, and privatizing of social programs. So how might that elite ‘tame trump’ if and when necessary? The preparations just in case are already underway. They include the following:

How To Tame Trump

There are at least six ways by which they can, and are now preparing, to control him.

1. Trump Business Conflicts

Trump has 111 businesses in 18 countries. It is not possible to even put these in a blind trust, as previous presidents have done with their business interests. The elite will gather all the incriminating evidence they can to reveal his conflicts of interests, if necessary, at some point. They will threaten Trump quietly first to reveal and proceed against him and, if he doesn’t respond in their favor on some issue or policy, start the process of undermining his reputation and credibility in the media and with public opinion. Keeping the heat on will be mainstream media like the New York Times, Washington Post, and major broadcast TV sources. It won’t be difficult to dig up the dirt.

2. Trump Foundation

Like the Clinton Foundation, as with foundations of many of the super wealthy, the Trump Foundation is a source of potential major scandal. Incriminating or even insinuating investigations will be undertaken quietly, and then publicly if necessary.

3. Nepotism Charges

Trump has already shown a preference for family member involvement in his administration. That opens him to criticism of nepotism. That becomes the nexus for alleging Trump using the presidency to enrich himself indirectly through his family connections.

4. Trump’s Tax Returns

Trump may not have released his returns during the campaign, and probably for good reason. Few in the wheeling-dealing commercial real estate sector are squeaky clean when it comes to tax avoidance and even fraud. The worse of his tax matters will be quietly passed on to the New York Times and other media. They can be revealed at the appropriate juncture, if Trump doesn’t ‘play ball’ with the elite on matter of policy the latter consider strategic.

5. Attacks on Trump Appointees and Family

Trump can be damaged and undermined by attacking his appointments and family members. Favorite targets will be radicals like Steve Bannon of Breitbart who has been brought into the Trump White House as advisor. Trump’s son-in-law may prove another favorite target. So might even be his appointed national security adviser, General Flynn. Already major feature pieces on Bannon have appeared in the Times and media. The media continues to keep alive Flynn’s alleged pro-Russia views and contacts. Meanwhile, talking heads experts continue to appear on the mainstream press TV shows like CNN, MSNBC, CBS and others continuing the press the election themes of Trump’s character limits and dangerous personal traits. The elite will keep these issues of Trump judgment and volatility before the public, until Trump comes around and adopts US elite policies, especially on foreign policy, trade, and other matters.

6. Violations of Law

Trump’s proclivity to engage in tweets may yet get him in serious legal trouble. So too may any precipitous incitement of radical elements and actions that result from his public statements. Or any premature over-reaching Executive Orders.

From ‘Faux Left’ to ‘Faux Right’ Populism

In 2008 Barack Obama ran for president based on a program that in some ways was clearly populism. Entering the president primary race late, in early 2008, Obama’s advisers vaulted him to the nomination six months later by employing a strategy that consistently was to the left of the other Democrat candidates, Hillary Clinton and John Edwards. Obama appeared the popular left candidate. Many voters were sufficiently misled. Immediately after elected, however, Obama proceeded to appoint advisers and cabinet members who were clearly representatives of the banking industry and business interests in general. Neoliberal policies were given a ‘left cover’, as Obama then ruled from the ‘center-right’ on key matters of economic policy of primary interest to the elite—i.e. bailing out the banks, rescuing big businesses from bankruptcy, ensuring the stock and bond markets boomed, pressing for free trade deals, going slow and minimalizing banking regulation, ensuring healthcare reform did not include the ‘public option’ or even consider Medicare expansion, and turning over US jobs and trade policy to figures like Jeff Immelt, CEO of General Electric. Mortgage companies were given preference over bailing out homeowners facing foreclosure and ‘negative equity’. Latinos were deported in record numbers, students allowed to accumulate more than $1 trillion in debt, job creation involved mostly low paid, contingent service work, pensions were allowed to collapse, senior citizens’ savings evaporate while investors enjoyed eight years of near zero interest rates, and progressive labor legislation was quickly shelved.

What started as a hope of a resurrected left populism quickly and progressively decayed into a comprehensive program that delivered 97% of all income gains to the wealthiest 1% households.

Voters chose a black president in 2008 because they wanted change. They didn’t care about his race. They didn’t get it. In 2016 they now voted again—for change. Those voters did not become racist in the past eight years, even though the candidate they just voted for indicated in many ways he himself was racist and misogynist, to name but a few of his apparent character faults. Those voters who in 2008 chose a ‘left populism’ that turned out to be false, chose in 2016 a ‘right populism’. But what they will get is not populism but another disappointment.

Like the Obama regime, the Trump regime will retreat to a neoliberal US elite regime. It will be a ‘Neoliberalism 2.0’. An evolved new form of Neoliberalism based on the continuation of pro-investor, pro-corporate, pro-wealthy elite economic policies—with an overlay of even more repressive social policies involving immigration, law and order, privatizations, cuts in social programs, more police repressions of ethnic communities, environmental retreat, limits on civil liberties, more insecurity and more fear. This is the new form of Neoliberalism, necessary to continue its economic dimensions by intensifying its forms of social repression and control.

We predict Trump will concede to elite neoliberal policies on Trade and Foreign Policy eventually, as he already is about to do with regard to elite policy preferences on taxation and deregulation. If he does not, elite interests are waiting in the wings, gathering the evidence and ammunition to attack Trump more directly if necessary, should he not comply. So long as he plays ball with them, they’ll just hold their ammunition at the ready. They will lock and load, and cock the hammer, taking aim and give a warning.

Trump will respond. He will come around to their demands. After all, he has more personally to even lose than did Obama. Faux left is replaced by faux right in American politics.

Jack Rasmus

Jack is the author of Systemic Fragility in the Global Economy, by Clarity Press, 2016, ‘Looting Greece: An Emerging New Financial Imperialism’, by Clarity Press, October 2016, and the forthcoming ‘Central Bankers at the End of Their Ropes’, Clarity Press, March 2017. He blogs at jackrasmus.com. His website is jackrasmusproductions.com. His twitter handle is @drjackrasmus.

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For my analysis of how the US elite will ‘bring Trump around’ to their positions on domestic and foreign policy issues, and create a new ‘Neoliberalism 2.0’, listen to my Nov. 28 Alternative Visions Radio show at:


or at:

Alternative Visions – ‘Taming Trump’- 11.25.16


‘Trump’s ‘faux’ populism from the right is replacing Obama’s ‘faux’ populism from the left. Rasmus discusses how Trump will govern on economic issues (tax cuts, trade, business deregulation) no different than past mainstream establishment politicians. But will govern more repressively and radically on social issues, especially immigration, law and order, environment, health care privatization (ACA and Medicare), and Education privatization. How Trump’s trade policy is still free trade by another name and his Infrastructure proposals will not boost jobs as promised. Rasmus argues Trump represents an attempt to forge a ‘Neoliberalism 2.0’, i.e. more intense economic support for corporations-investors amidst more reactionary social measures—to appeal to the establishment as well as his base. Examples of Trump’s retreat already, revealed by interviews this past week. Rasmus also reviews Trump cabinet appointments to date as well as those to soon come as indicators of how he’ll govern from two directions to placate his base and the Republican-business elites. Jack concludes with a review of the various measures by which the Republican-Capitalist elites will continue to pressure Trump on main neoliberal policies (taxes, trade, deregulation) to ensure they continue: his business conflicts, his foundation, his tax returns, charges of nepotism and alleged violations of law by him and his cabinet representatives. For Trump’s taming, watch especially appointments to Treasury, State, and Defense. NEXT WEEK: the upcoming Italian vote and the political unraveling of Europe in 2017.

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Jerry Mead Lucero, Host of Chicago’s Labor Express Radio,
Interviews Jack Rasmus, November 20, 2016 (43 min 41 sec)

To Listen GO TO Dr. Rasmus’s Website at:


Jerry Mead Lucero: On tonight’s episode of Labor Express Radio we take a look at the presidential election and ask what happened, why and what can we expect in regards to the impact on working people in the next 4 years. While much of the mainstream press is rightly lamenting the level of racism, sexism and xenophobia in this country that was revealed by Trump’s victory, few media outlets have focused on a class perspective and analysis of the election. This despite the fact that much like the Brexit vote in Britain last Summer, the vote from Trump was primarily rooted in the white working class. It is therefore essential that we understand why so much of the white working class was willing to take such a dangerous gamble on such dangerous candidate. Luckily friend of Labor Express Radio and regular guest, economist Dr. Jack Rasmus has taken on a class analysis. And he was willing to discuss his interpretation of the election results by phone yesterday. Tonight’s program will be devoted entirely to that interview.

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For an assessment of the early effects of Trump economic policies on the US dollar, interest rates, exports, manufacturing, construction, and jobs–and globally on oil prices, currency volatility, Europe-Japan-China-and emerging markets–listen to my Alternative Visions show of November 18, 2016: (56min.)


Alternative Visions – Trumponomics 1.0: Initial Economic Effects of Anticipated Trump Policies – 11.18.16

Or Go To:



Dr. Rasmus reviews the early effects of anticipated Trump policies, which are already significant: How the rising value of the US $dollar and long term interest rates, in expectation of Trump proposals for infrastructure fiscal spending, are already having major consequences for the US and global economies. Jack explains how the current rise in the dollar and long term rates ensure rising Fed short term rates, lower global oil prices, will result in a decline in US net exports and thus manufacturing production and jobs in the US. Why rising rates may negate Trump fiscal-infrastructure spending and job effects? How the rising dollar and US rates will have negative effects in Europe and Japan; will force China’s currency to devalue and accelerate a global currency war; and why Latin American other emerging markets economies destabilization will now intensify with more capital flight, currency collapse, inflation and recessions. Jack concludes with a discussion of Trump tax proposals to repatriate US multinational corporations’ $2.5 trillion offshore cash hoard by reducing their tax rate from 35% to 10%, explaining how that was tried with disastrous results already in 2005. How Trump tax proposals are a continuation of established Republican neoliberal tax policy since Reagan and will mean another $4.5$ trillion in corporate tax reduction—following Obama’s $6.1 trillion corporate-investor cuts 2009-2013 and GW Bush’s $3.4 trillion handouts in 2001-04.

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For a deeper analysis of why Trump won, and what the immediate and longer term economic consequences of a Trump presidency might be, listen to my Nov. 11 Alternative Visions Radio show commentary. To listen to the 57 min. commentary,


Or Go To:


Jack Rasmus discusses the economics behind why Trump won the election, and the economic legacies of the Obama regime behind why the white working class in the great lakes region—from Pennsylvania to Wisconsin—abandoned the Democrats and voted against the political elites and Clinton. Jack refers listeners to his shows earlier this year and predictions this would happen. (see also articles on his blog, jackrasmus.com). The no-college white working class vote was key, along with lower turnout for Clinton among Latinos, youth, and even African-Americans compared to 2008 and even 2012. The show then reviews the areas of economic consequences expected from a Trump election, including: booming stock markets, rising bond interest rates, big corporate tax cuts coming quickly, Infrastructure spending, more price gouging by pharmaceutical companies and health insurers, the early dismantling of Obamacare and Dodd-Frank bank regulation acts, likely repeal of alternative energy credits, restoration of the Keystone pipeline project, gutting of the EPA’s funding, suspension of proposed industrial plant emissions, refusal to implement the Paris climate accords, boosted production of gas fracking, pipelines, and coal production, an immediate Federal Reserve rate hike in December and more likely in 2017 now, renewed attacks on social security, surging government deficits and debt, general deregulation of business and across the board repeal of Obama executive orders and passage of anti-Latino immigration legislation. The consequences for the global economy are also considered, with focus on emergency markets currency collapse, capital flight and further recessions, rising US dollar and falling oil prices, China’s currency devaluation, Europe and Japan QE policies, and likely measures addressing free trade including NAFTA, TPP, and TTIP.

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The following is my follow up article, soon published, analyzing the Trump election win and its consequences. Dr. Jack Rasmus

Why Trump Won—And What’s Next
Copyright 2016

“US real estate billionaire, Donald Trump, is president-elect. In an age when 97% of all GDP-national income gains since 2010 have accrued to the wealthiest 1%–of which Trump is one—how could American voters come to elect Trump? How could they vote for a candidate that they simultaneously were giving a ‘negative rating’ of 60% to 80%? That fundamental question will ever haunt this election.

What the election shows is that American voters in electing Trump wanted ‘anything but the above’ Obama policies of the previous eight years, policies which were just extensions of the neoliberal regime established in the 1980s in the US since Reagan. And voters didn’t care about the political warts, past or present, of Trump. They just wanted something different. They wanted to ‘stick their thumb in the eye’ of the ruling political elites (of both parties).

The voters’ message was: ‘you, the political elite, have hurt and harmed us these past eight years. You have ignored us and left us behind while ensuring your wealthy friends recovered quickly and well from the 2009 crash. We have experienced great anxiety and insecurity. Now have a taste of that yourself!’

Trump’s campaign gaffs, his personal character, his missteps and outrageous ‘off the cuff’ statements, his lack of any government experience, only enhanced the view that he was not just another elite politician. His lack of TV ad spending, absence of a so-called ‘ground game’ organization to turn out the vote, his having lost all three TV debates according to pundits and the press, his lack of ‘field organization’ and a poorly run Republican Party convention—all that was irrelevant. What his win, in spite of all that conventional political wisdom of what it takes to win an election, reflects is that the equation of politics is changing in the US as the people, the ‘masses’ to use jargon of prior times, are entering the political arena as a political force.

And that fact is not just revealed in Trump’s election. It was evident in Britain’s recent ‘Brexit’ referendum to leave the European Union. It will next be reflected in Italy’s vote this coming December, in which political elite proposals for political reform to give them more power will also be rejected. It will reflect thereafter in the increasingly likely election of the far right ‘national front’ in French elections next year. And could further reflect in German elections thereafter, in which that country’s long standing and presumably untouchable political leader, Angela Merkel, may also be over-turned.

Obama’s Vanished Coalition

Trump’s election can be traced to the shift in key groups of voters who had supported Obama in 2008 and who gave Obama his ‘one more chance’ to do something in 2012, and who were deeply disappointed when he failed to do so since 2012. At the forefront of these groups was the white non-college educated working class, especially those concentrated in the great lakes industrial states in that geographic ‘arc’ from Pennsylvania to Wisconsin. This group not only turned from Democrats but turned to Trump—as they had in 1980 as the so-called ‘Reagan Democrats’—in response to another economic crisis of the 1970s during which they were also abandoned by the Democratic Party. Clinton 2016 thus lost key swing states of Pennsylvania, Wisconsin, Ohio, Iowa, and Michigan that helped put Obama ‘over the top’ a second time in those states.

Another important voter group that delivered for Obama in 2012 and did not for Clinton in 2016 in similar percentages were Latinos. They voted by a margin of 44% for Obama 2012, but only 36% for Clinton. Apparently, Trump insults of Latinos were less important than Obama deportation policies in recent years. Women voters were supposed to vote overwhelmingly for Clinton, but white women aged 45 and over did not. And 75 million ‘millennials, 34 and under, were driven away by Clinton and the Democratic Party’s treatment of the Sanders campaign during the primaries and by offering no solution to the hopeless scenario of insecure, low pay service jobs in exchange for record student debt. In short, white non-college educated workers abandoned the Democrats, while other groups simply ‘stayed home’ and did not vote in the numbers they previously had in 2012. (For my 2012 analysis of why Obama was given one more chance by these groups, see articles on this blog written during that election).

Somehow over recent years the Democrats, once a party purporting to represent workers, abandoned them to free trade, to low paid insecure service jobs, and to the wholesale privatization of retirement and healthcare systems in America. What was begun under Bill Clinton, expanded under George W. Bush, was allowed to accelerate under Obama. Democrat leaders instead came to envision themselves as the ‘corporate light’ party, agreeing to extending and expanding George Bush tax cuts for the rich and their corporations, free money interest rates, and focusing instead on educated suburbanites as their prime voter base.

The Origins of Trump’s Victory—Or, It’s Still the Economy Stupid!

The root of the Trump victory lies in the history of the past eight years and the deep failure of the Democratic Party—and its now lameduck president, Barack Obama—to ensure that Main St. America recovered from the economic crisis of 2007-09 and not just the wealthiest 1% and their corporations.

Hillary Clinton was not defeated so much by Trump, but by the failed performance of the Obama administration the past eight years, and her obvious inability to separate herself clearly from policies associated with the past eight years and to offer an alternative more radically different—as Trump clearly did.
We hear today from pundits and talking heads, who just yesterday were declaring that Hillary Clinton was a ‘shoe-in’, that the election has been a reaction of the ‘have nots’—i.e. those left behind. That’s true. The Trump victory is clearly another expression of the global wave of working class and non-elite reaction against the political elite, their parties, and the so-called neoliberal policy ‘Establishment’. But ‘left behind’ what?

The data show clearly that US corporate profits more than doubled after 2009. The US Dow stock market tripled in value. Bond market prices accelerated to record levels. And returns from derivatives and other forms of financial speculation, conveniently kept opaque from public scrutiny, no doubt surged to record levels as well.

The record US corporate profits alone were generously distributed to stock and bond shareholders—the 5% and especially 1% of wealthiest US households: since 2010 more than $5 trillion has been distributed in stock dividend payouts and stock buybacks alone in the US and in the past two years at a rate of more than $1 trillion a year. And to ensure that the corporations and wealthiest 1% got to keep most of that distributed income, corporate and investor taxes under Obama since 2009 were cut by more than $6 trillion—extending the Bush tax cuts and then some. And all that’s not counting other forms of capital incomes earned by the wealthiest 1%.

Augmenting this historic massive profits gains and income redistribution favoring the 1% and corporate America, US businesses have had access to trillions of dollars more in virtually free money, made possible by the US central bank’s policies of quantitative easing and zero bound interest rates. In each of the last three years corporations ‘borrowed’ $2 trillion a year by issuing corporate bonds. They then hoarded the cash instead of investing and creating jobs. The zero rates also accelerated real estate property prices benefitting the wealthiest. Since 2009, commercial real estate property has boomed in price, as has high end residential housing.

And what did the ‘have nots’ get since 2009? Stagnant wage gains. Low paid service jobs—often part time, temp, contract, and ‘gig’—in exchange for the higher paid jobs they lost. And tens of millions of young millennials with little hope of anything better for decades to come. The near zero rates for eight years engineered by the Federal Reserve, in turn meant 50 million retirees—grandpa and grandma— earned no interest income whatsoever for the past eight years and still don’t. Meanwhile, more pensions collapsed and medical costs rose. The ‘have nots’ got to deal instead with 13 million home foreclosures and trillions of dollars of home values ‘under water’ as they say, where the home value is less than the mortgage. And millions of homeowners still struggle with that. Mortgage companies and banks were quickly ‘bailed out’ by the Obama administration by 2010, but millions of small homeowners were ‘left behind’ and still are.

During the last eight years no bankers went to jail for their actions after 2009 and have steadily chipped away at any remnants of financial regulation. Big tech companies continued to hoard trillions of dollars of their cash overseas in subsidiaries to avoid paying taxes, while bringing hundreds of thousands of skilled tech workers every year into the US (legal immigration) on H1-B and L-1 visas to take prime jobs that should have gone to US workers. Big Pharmaceutical companies continued to price gouge, causing thousands to die as a consequence of unaffordable prescription drugs. Millions of college students accrued more than a trillion dollars in debt. Latino minorities were deported in record numbers, breaking up thousands of families; police militarization and violence repressed African-Americans in the inner cities; unchecked fracking poisoned water supplies and air; and the country’s infrastructure continued to rot from the inside out at an accelerating rate.

After previous administrations failed to privatize health care in the US, Obama succeeded with the Affordable Care Act—aka ‘Obamacare’. At a cost of nearly $1 trillion a year, covering less than 15 million of the former 50 million uninsured, Obamacare redistributed income to provide subsidies to those covered. In exchange the subsidized who bought Obamacare policies got super-high deductible, low coverage, health insurance. Health insurance companies in turn got tens of millions new customers guaranteed and paid for by taxpayers, and then continued to game the system for more profits. Obamacare became less a health care system reform act than a health insurance company subsidy act. It was the logical consequence of Obama’s withdrawal of the ‘public option’ and Democrats’ refusal to even allow debate on extending Medicare for all. It will be repealed very shortly.

Not least, the Obama administration championed an acceleration of free trade deals that promised to send even more jobs offshore, after having pledged to oppose free trade when he was first elected. Bilateral trade deals were signed by him, TPP and TTIP (Europe) pushed, and the worst effects of NAFTA and CAFTA were ignored. Obama not only became the greatest deporter of immigrants in US history, as H1-B legal immigration was expanded by several hundreds of thousands.

In foreign policy, the US continued its constant wars in the middle east that were never won or ended, as Obama promised. Hillary herself was the prime instigator of the Libyan fiasco, a proponent of more direct military intervention in Syria, and probably supported the coup in Ukraine behind the scenes. All that did not win her votes, especially among millennials. American voters have become sick and tired of the incessant war policies of the administration.

By not fundamentally breaking from this destructive economic and political legacy—the legacy of Obama and neoliberalism itself since 1980—Clinton all but ensured her fate and abandoned the field to Trump on the real issues. Trump didn’t even have to offer specifics of what he’d do different; just the impression that he somehow would reverse the policies quickly and in some way.

What’s Next: The Immediate Consequences of Trump’s Election

• Contrary to predictions of financial collapse, the Trump victory has already meant a big gain in stock markets, as corporations and investors prepare for what they believe will be further big tax cuts quickly. After more than $10 trillion in business-investor tax cuts since George W. Bush in 2003 to the present, trillions more are coming, and fast.
• The fate of the TPP is also now questionable—unless of course some way is arranged to push it through Congress rapidly in a lame duck session before Trump is sworn in as president in January, and providing he turns a blind eye to that (which is likely).
• The US Supreme Court will now become even more conservative and for decades to come, as Trump delivers on appointing ‘two, three’ Antonin Scalia-like nominees to the court. It is unlikely Democrats in the Senate can successfully oppose that until 2018.
• Racist elements at the grass roots will be greatly heartened by the Trump victory. As will militarized police forces. More clashes with immigrant and minority citizens on these issues will almost certainly grow in the period ahead.
• Obamacare will be repealed in toto in early 2017. Tens of millions will be left back where they were in 2008. Health care premiums and drug prices will surge still further.
• Dodd-Frank financial reform will also disappear, as weak as it was. Bankers will escalate their policies of financial speculation creating more financial instability. Consumer financial protections will be rolled back.
• Environmental policies will be rolled back. The EPA will be gutted and reduced to a token function in the government. Recent global climate deal in Paris will now unravel.
• Infrastructure spending by government will be on the table, passed by a Republican Congress in exchange for further massive corporate tax cuts. Infrastructure spending will be insufficient and will not significantly boost US growth and jobs.
• An immigration bill will pass, but will prove harsh and harmful for immigrants from Latin America. H1-B and L-1 visas will expand, bringing more skilled foreign workers to the US to take high paying US jobs.
• In foreign policy areas, NATO policies of the US will shift. Europe will reconsider Russian sanctions. The recent Iran deal will get a ‘new look’. A US-Russia deal on Syria will be explored. More Asian countries, like the Philippines, will consider closer ties to China as US influence wanes in Asia.

Of course, all the above shifts and changes are based on the assumption that Trump’s campaign positions and promises will actually translate into domestic and foreign policy changes. That may not happen. It may have been all campaign rhetoric. Time will tell. Watch whether the US political and economic elites in the immediate weeks again can successfully maneuver Trump into appointing their kind to the key policy implementation roles in a Trump administration—as they did with Obama and other neoliberal presidents before. My guess is that they will, for the real power in US politics lies with the elites behind the political parties and their formal political institutions.

Trump made his billions by simply providing his name to properties and assets that he himself doesn’t not even own. We may soon see a political form of this celebrity economic strategy.

US Neoliberal policy may not change fundamentally in a Trump regime; just its appearance. Neoliberalism formed under Reagan-Clinton-Bush imploded in 2007-09. Obama has not been able to fundamentally restore it in its original form. A new form of Neoliberalism will now be attempted—a form even more harsh than before.

US voters may come to realize that their ‘rebellion against the political elite’ cannot be achieved through either wings of the single party of that elite—whether Republicans or Democrats. The rebellion will have to move outside the neoliberal political party structure. That may be the next major political lesson to be learned.

Jack Rasmus, November 9, 2016

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To quote my previous article of Nov. 4, posted on this blog two days ago:

“What the preceding analysis suggests is that Trump’s ability to turnout a highly disaffected white working class base in the Pennsylvania to Wisconsin geographic ‘arc’ may prove the determining factor in the election. Whether Hillary can neutralize that turnout by counter-mobilizing suburbanites, minorities, and millennials (the least likely) in those same great lakes region ‘swing states’ is the fundamental question in this election”

This election was, as I continually have said since summer, a ‘rebellion of the working class’ against the political elite of both Democrat and Republican parties. Trump was able to mobilize and turnout his base of non-college educated working class (combined with the traditional conservative rural, small town, small business base) more effectively than Hillary Clinton was able to turn out her base of suburbanites, minorities, college educated, and women.

More white non-college workers switched from Democrat and voted Trump in 2016 than they switched and voted for Reagan in 1980.

Clinton Latinos turned out to vote significantly less than they did for Obama in 2012. Obama’s Latino margin over Romney was 44%; Clinton’s only 36%. Women over 45 went for Trump, and millennials turned out in less percent for Clinton in 2016 than for Obama in 2012.

The states that put Trump over the top were once heavily working class and Democratic Pennsylvania, Wisconsin, with Michigan and Minnesota likely to follow as well when the final vote is tallied. These are the states most severely impacted by free trade, offshoring of jobs, and declining living standards.

Public Opinion polls totally mis-forecast the US election, as they did with the UK Brexit referendum vote last June. They predicted a 3-5% vote in favor of Clinton. The popular vote was in favor of Trump.

For a more in-depth analysis, and ‘what happens next’, see my follow up article to be published later today.

Dr. Jack Rasmus

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