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Trump and The Middle Class

There is no doubt Trump’s election was a victory for the middle class. It was fed up with Obama, the media and the lies that politicians were feeding them. While the media reported on the economic boom and the benefits of Obamacare, the middle class was dealing with lower wages, higher inflation and a shrinking job market.

The middle class had enough and elected someone who they believed would help them.

President Trump’s election highlighted divisions that already existed. The middle class and the Conservative movement hated the policies of Barack Obama; but, they acted in a manner respectful of the Presidency. To the contrary, President Trump has not been given the same measure of respect by the Left whose members have come at him with figurative pitch forks.

I believe we’re approaching what may well be the most dangerous period in our country’s political history. We face a myriad of serious problems, starting off with a twenty trillion dollar deficit. Yet, I continue to be optimistic that what lies ahead will be great for the country.

Because of our enormous debt and the size of government, President Trump has implemented a hiring freeze on all federal employees. Government employees have been put on notice that change is the order of the day, but they are not alone. Lobbyists, and all those who make money off of the government, are worried as well. President Trump is a threat to their way of life and of doing business. When Boeing airlines made known the price of the New Air Force One, the President balked and said, “No. It is too expensive.” It was an unequivocal message to all contractors that the days of bilking the government were over.

The main push back for the President has come from the Deep State. The “Deep State” has been referred to as “the secret government-within-the-government” that actually holds tremendous power.  Many of the government secrets and power structure reside in the Deep State and many members of our government operate there.

Presidents come and go; but, people who have real power often stay in government positions for decades. For example, there are 79 members who have been in Congress for at least twenty years. Now add in all the career government employees, over 1 million, that work at all of the government agencies and you get an idea of what comprises the Deep State. These people  have a vested interest in keeping things as they are. This President is a threat to all of them.

The key to understanding the war being fought between the Deep State and President Trump’s vision of America is knowing how money flows in the United States. For the last 30 or so years, the U.S. economy has been built around a model that created vast power in Washington. This model has three key components.

First, we have a highly “progressive” income tax. This ensures that anyone who makes significant income will pay the majority share of the government’s expenses. We live in a country where half the country pays zero taxes and the top 10% pay  80% of all taxes paid. Because of this, the electorate continues to vote for more and more government. They do so because the pay off is no taxes and increased benefits.

Secondly, the government has an incredibly powerful regulatory scheme in place. This allows Washington to essentially control vast segments of our economy.  Healthcare and Wall Street come to mind. Look at Wall Street, for example. Who gets to sell a bond or stock to the public? Only those approved by the Securities and Exchange Commission.  This power results in a tremendous amounts of graft– legal fees, fines, and hidden lobbying that flows into Washington to feed the parasites. The Left’s rallying cry to harness capitalism revolves around regulation. But these regulations only make the players in the industry more powerful while simultaneously shielding them from new competitors. The regulations only exacerbate the problem for the consumer and benefit business…the opposite of what was intended.

Thirdly, there is  the North American Free Trade Agreement (NAFTA) which gutted the U.S. manufacturing sector when it was sold as a means of boosting it! In addition, these trade agreements have allowed our country to export all of the inflation generated by our central banks, since the U.S. dollar is the world’s reserve currency. This has led to decades of declining interest rates and allowed the government to borrow endless amounts of money without any serious consequences.

I believe these three policies are the foundation of the Deep State. President Trump has started to attack many of these pillars. He has begun a fight with the Deep State. His opposition is coming from all sides. The media and the politicians are trying to obfuscate the issue; but this opposition is real and dangerous because they know the President has the power to dismantle The Beast.

What President Trump is doing right now by way of  his border-adjustment tax (taxes on imports), additional tax reform, and regulatory rollback is targeting each of these pillars at the same time. If he succeeds (“wins” in Trump speak) the power that has been consolidated in Washington, D.C. over the past 40 years will evaporate.

The Left and the Right have both been enemies of the middle class. Take a look at NAFTA.  The case for NAFTA was that it would allow American consumers access to cheaper products, thus helping them. That it did, but at what price? It devastated the manufacturing industry.  So although the the middle class had access to cheaper goods, they did not have the money to buy them. So where did the money go? To Washington and to the top 10% of America’s wealthiest who were able to access foreign markets and shield the resulting income from America’s tax system! Shameful.

Then, take a look at our tax system with its complexity and aggressiveness that have hurt the middle class the most . The U.S. is the only industrial country in the world with global income taxation. That’s right. You have to pay federal income tax no matter where you live. So what have the big corporations and wealthy individuals done? They have moved their assets offshore and set up companies outside the purview the U.S. government thereby shielding their assets from Washington.  The result is that the tax burden has fallen on the middle class to make up this shortfall…punishing wage earners while rewarding individuals and corporations who use overseas labor.  While the rich shield their money the poor pay no taxes. Voila! The middle class foots the entire bill. The result has been a decline in real, after-tax wages over the last 40 years.

Such is the recipe that has destroyed the middle class.

Trump’s tax plan is to effectively lower income taxes to 25% and implement a value-added tax to discourage foreign production of U.S. products. In an nutshell, this tax plan will force companies to come back to the U.S. and produce their goods here. Companies will no longer be able to hide overseas. These two changes will turn this entire economic structure on its ear and gravely hurt the Deep State which controls it. The winners will be the middle class, small-business owners, wage earners, and America’s manufacturing base. The losers? All of those who have invested heavily in the current Deep State regime.

With passage of the bill,  Trump’s new economic model could become a reality by the end of 2017 and initiate a new economic paradigm for the United States. The line is drawn. Let’s keep a close eye on who is standing on which side and why. Then when midterms roll around, let’s hold accountable those who stood on the side of the Deep State in opposition to middle class Americans. No more secrets and accountability. Wouldn’t that be novel.

Steve

sleeclark@gmail.com

 

 

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