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US Presidential Election: Trump’s Policy on Domestic Poverty

Trump's Policy on Domestic Poverty
With so little time left until the U.S. presidential election, the tension between candidates, ideologies and policies has nearly peaked. Donald Trump’s policies hold the promise of “making America great again” by reinvigorating the economy through protectionist trade policies, ridding the country of those who take advantage of the system as well as tax cuts to the rich and corporations. Further study shows that a different outcome would result from Trump’s policy on domestic poverty.

According to many economic experts, Trump’s policy on domestic poverty would lead the nation into recession, most harshly affecting the poorest households. Trump’s policies would “significantly” weaken the country and drive the U.S. into a “lengthy recession,” according to a Moody’s Analytics report. An estimated 3.5 million jobs could be lost and the unemployment rate could increase from 5% to 7%. The average household would face a regressive consumption tax of $11,100 over five years.

Citing trade deficits with Mexico, China and Japan, Trump has continuously claimed that the U.S. has lost its dominance through weak trade agreements and outsourcing manufacturing jobs. To change this and promote domestic production, Trump plans to impose a 35% tariff on goods from Mexico and a 45% tariff on goods from China and Japan. While producers and the government would gain $43 billion and $65 billion, the total loss to the U.S. economy would be $170 billion, according to the National Foundation for American Policy. The average household would lose 4% of its income and for households making “the lowest 10[%] of income up to 18% of their (mean) after-tax income” would be lost.

According to the study, tariffs on imports from the three countries would not even protect U.S. workers from foreign competition, meaning the, “only logical alternative would be to impose a similar set of tariffs on all other countries that export to the United States.” This approach could cost households with the lowest 10% of income to lose a massive 53% of their income.

Trump also promised to deport the more than 11 million illegal immigrants in the U.S. Although he recently softened his immigration stance, many still idealize a future without illegal immigrants. The massive deportation, however, would shrink the economy by about 2%, from a $400-$600 billion GDP collapse, decrease the workforce by about seven million and cost millions of dollars to implement, not to mention the construction of a nearly 2,000-mile-long border wall. The economic slump would inevitably magnify the struggles of the poor as it caused consumer product prices to increase.

Last but not least, and perhaps most unclear to the public, are Trump’s tax plans. Although dubbed the “blue-collar billionaire,” Trump’s economic plan will give reduced tax rates to the wealthiest individuals, from 39.6% to 33% and corporations, from the proposed 25% to 15%. The new tax policy would increase government deficit by an estimated $10 trillion over the next decade, according to the Tax Policy Center, slashing the funds for social security, medicare, Medicaid and interest payments that already make up more than two-thirds of the annual budget. Yet Trump has offered few expenditure reduction proposals that would make up for the revenue loss, meaning that the millions of Americans who rely on these government benefits would likely suffer. Otherwise, spending on all other programs would need to be cut by 53% to meet the revenue loss, according to the Center on Budget and Policy Priorities.

In response to his tax plan critics, Trump has cited his belief in trickle-down economics, a theory that states that if the rich receive tax cuts, the money they save will be invested and eventually trickle down to the poor, invigorating the entire economy. The theory, however, has been repeatedly disproven. In 2012, the Tax Justice Network conducted a study that suggested between $21 and $32 trillion has been siphoned from the world economy by the rich and put into private, off-shore accounts. In 2015, the International Monetary Fund also filed a report showing that the trickle-down effect does not exist, as the rich continue to get richer.

As Election Day nears, it is important to consider the impact of both candidates’ policies on the economy and the poor in particular.

– Henry Gao

Photo: Flickr

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Bernie Sanders on Global Poverty

Sanders
Bernie Sanders, one of the leading democratic candidates in the 2016 Democratic Party primary race, has been praised for his stance on promoting equality. Over the course of his congressional career, he has been an ally for the millions of impoverished around the globe.

In speeches, Sanders has claimed that investing in global poverty has several positive outcomes, such as lessening the instances of terrorism abroad. He has claimed that with a sound foreign aid policy, living conditions abroad are less likely to produce conflict.

Sanders has an impressive track record on global poverty to back up these claims. In 2000, he voted in the Senate to allocate $156 million from the military’s large budget to the International Monetary Fund. This was in support of the Millennium Development Goals.

In 2008, he also supported funding to combat AIDS, malaria and tuberculosis. The bill he supported authorized $48 billion to various countries to combat the further spreading of these diseases.

Sanders has also demonstrated his support for combating global poverty in his statements about global warming. He has described how international conflict is produced when populations become desperate as a result of climate-related hazards, including lack of access to water and food.

Sanders has been vocal about eliminating income inequality and domestic poverty. He has shared his aspirations for putting an end to systemic forces diminishing the middle class, claiming that a more equitable economy can be created through fair taxing of corporations and banks. “America now has more wealth and income inequality than any major developed country on earth,” he said.

The presidential hopeful is devoted to redistributing America’s wealth and alleviating the 22 percent of American children living in poverty. His focus on domestic poverty and inequality is a promising indication of his future foreign aid and global poverty commitments.

– Mayra Vega

Sources: Global Citizen, Votesmart, Feel the Bern, Newyorker, U.N.
Photo: Vox

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Federal Poverty Level: Its Affects on the Economy

Federal Poverty Level
The federal poverty level is a measure that is often cited yet seldom is it fully understood.  Currently, the federal poverty level is considered to be at about a $15,000 yearly income per two-person families and, of which, the extreme poverty threshold  is set to households that are living on less than $2 per day.  This definition is fairly controversial, and has been subject to change over the years based on a number of factors.  However, it is a key concept to understand, and not just for domestic policy but foreign affairs as well.

The federal poverty level, or threshold, has been in effect in its current state since the Kennedy Administration.  According to a paper by economist, Gordon M. Fisher, the level was initiated in order to understand the risks of living in poverty  and the affects of poverty on different groups of people.  During the Johnson Administration, the level was used as a target; particularly, during the administration’s War on Poverty.

The level was developed based on the cost of food for families at the time and what kind of nutritional diet a family would be able to have at different levels.  Under the first calculation of this threshold, done by an economist working for the Social Security Administration, the threshold was determined at $1,988 yearly income per two-person households.

Since its creation, while a number of revisions have occurred since the first set of calculations, the formula to determine the level has been an important factor in U.S. policy decisions.  When looking at global poverty, the extreme poverty measure is particularly important for the threshold has been used to set goals for anti-poverty measures.

The Millennium Project is one such measure that uses the federal poverty level calculations to influence foreign policy.  The project has a number of goals to keep the global economy move forward, but listed first on these goals is the effort to “eradicate extreme hunger and poverty.”  These goals were set in 1990 with initial targets set to hit these goals.

The initial target for the extreme poverty goal was to halve extreme poverty by 2015.  Reminiscent of Johnson’s War on Poverty, this goal looked to drive the force for a greater world society.  The goal actually was estimated to have been reached by 2008, an achievement that was praised as a major success for the Millennium Project.

Despite the fact that poverty levels are used by programs like the War on Poverty and the Millennium Project, the poverty threshold has a number of critics.  Popular criticisms are that the threshold is too low, as it still uses calculations from the 1960s, and are applied indiscriminately to very different regions.  Alternative poverty measures have been proposed by state governments and by groups such as the National Academy of Sciences.  Unfortunately, none have yet been adopted.

Federal poverty levels are important to understand considering they are most often used in discussions surrounding poverty.  The measures influence policy decisions and are used to track the path of the U.S. economy.  The indications are that extreme poverty is going down across the world, but what this says about actual poverty and what it says about the way it is measured could be debated in some corners.

– Eric Gustafsson

Sources: The New Yorker, Huffington Post, UN Millennium Project, Social Security Administration, Center for American Progress