Trump’s Biggest Problem – Not the Russian Investigations

by Elliott Morss, Morss Global Finance

Introduction

The papers are full of speculations of possible collusion between Trump associates and the Russians. And there is even now talk of Trump leaning on US intelligence leaders to drop the investigations. However, throughout all of this, his core supporters have stuck with him. But there is an area that will cause him to lose a large segment of his supporters – his policies. Below, supporters and the policies that will cause them to reject him are examined.

Please share this article – Go to very top of page, right hand side for social media buttons.

Trump’s Supporters

Recently, some survey pundits have claimed Trump’s support did not come to low income Americans. This claim is misleading. Many high income Republicans voted for Trump, so the correlation with strictly low income voters is not straightforward. However, we do know the following:

• Trump won the Republican primary in 89 of the 100 counties most negatively affected by competition from China;
• A poll by the Pew Research Center during the primary found that 60 percent of Trump’s supporters said trade had hurt their family’s finances;
• Trump was especially popular where outward mobility was low;
• Trump was popular where voters were struggling to maintain their standard of living.
• Trump won in regions where male death rates were higher.

Putting all of this together, we see a significant segment of Trump support came from areas that lost high paying jobs in manufacturing and other “semi-manual industries. Some of these people are quite desperate, feel their unions and the Democrats have abandoned them, and are struggling to maintain their living standards. Some of them, in their frustration, have turned to alcohol and drugs as evidenced by the higher male death rates.

What Are Trump’s Policies and Why the Budget Matters

The budget is the mechanism by which Trump can deliver on his campaign promises. And while many in Congress have said Trump’s proposed budget is “dead on arrival,” an examination of his budget proposal does tell us what Trump’s “technicians/“hired hands” have in mind. And here is the problem: all of his staff are Republicans promoting traditional Republican goals – strong military, less government, tax breaks for business and wealthy individuals. But these are not the goals his core supporters described above are after. They want higher paying jobs and there is no evidence in Trump’s budget request where they are going to come from.

Trump’s Budget

Table 1 provides detail on Trump’s budget proposals for the largest Federal departments. Those cut by the most are State/International programs, Education, EPA, HUD, Energy, and Agriculture.

Table 1. – Trump 2018-19 Budget Requests (bil. US$)

Source: White House

Table 2 provides a more detailed breakdown on selected budget items. Trump said he would not touch Social Security or Medicare. And his budget reflects this: both items are projected to grow about 20% by 2019. However, the Congressional Republicans are hoping to change the health care legislation in a way that the Congressional Budget Office has estimated will reduce coverage by 23 million. This would cause many of the non-Republican Trump supporters to lose their health care insurance.

Looking at HUD, Trump’s aides want cut community development grants and housing assistance way back. And indeed, many of Trump’s budget cuts are, in effect, local budget cuts that ignore the economic realities of the communities that voted for Trump.

Table 2 – Selected Requests (mil. US$)

Source: White House

The Pew Charitable Trusts says:

“Of $3.5 trillion in federal outlays in 2014, nearly $589 billion was in the form of grants directly to states, localities, individuals and nonprofits.”

Other items in Table 2 are troubling. The President’s aides apparently don’t believe diplomacy works, despite the fact that Defense Secretary Mattis has said:

“If you don’t fund the State Department fully, then I need to buy more ammunition ultimately. So I think it’s a cost benefit ratio. The more that we put into the State Department’s diplomacy, hopefully the less we have to put into a military budget as we deal with the outcome of an apparent American withdrawal from the international scene.”

When it comes to energy and the environment, the aides are proposing significant cutbacks in research and environmental cleanups.

Conclusions

Trump is not a “details” person. But it appears that his “details” people have little compassion for his less well educated supporters. And this could have significant implications for Trump’s support going forward.

I close with a quote from Bernard-Henri Lévy:

“For Trump, the real danger will come as the crowd he captivated and captured during the campaign begins to turn on him. That crowd, as astute political observers from Plato to de Tocqueville amply demonstrated, becomes harder to evade the more you make it master. The worst case is never inevitable. May the mob of the populist tide become once again the great American people, a people of citizens. When that happens, Trump will be history.”