A recent government report showed Gross Domestic Product (GDP) for this year’s second quarter was 4.1 percent — its highest since 2014. President Trump used this opportunity to claim credit for an “economic turnaround of historic proportions,” which it surely is not.
Chuck Collins, director of the Program for Inequality and the Common Good, joined Rising Up With Sonali to discuss Trump’s exaggeration of the health of our economy, as well as how a little-known loophole is allowing the rich to warehouse wealth, disguising it as charitable giving.
“Presidents like to take credit for good news and blame somebody else for bad news,” said Collins, adding, “that is just politics.” However, Collins argues that Trump takes it to another level of “boastfulness and misinformation.”
As Collins points out, in one-quarter of 2014 GDP was down negative 1, then rose to 5.1 the following quarter. The high fluctuation of GDP, said Collins, is the reason why presidents generally shy away from claiming credit for it, even when it performs well.
Other economic indicators tell a different story. While Collins acknowledged that unemployment was low, “real wages,” he said, “have pretty much stayed stagnant since the great recession [of 2008], and really for several decades half the population has not shared in the economic gains of the last 30 [or] 40 years.”
According to Collins, “homeownership rates, savings rates, [and] all the other indicators of economic well-being are not looking so good.”
“What we know is that this is a juiced up economy,” Collins said of the GDP figures. “Growth is not based on healthy fundamentals like real wages going up, but based on… unprecedented military budgets, [and] tax cuts that are mostly going to the wealthy.”
Those things might have a “stimulating effect on the economy [in the short term], but the long-term prognosis… is really problematic,” said Collins.
As a consequence of Trump’s tax cuts propelling wealth concentration at the top, charitable giving by ordinary citizens has steadily declined — a result Collins linked to the aforementioned stagnation in real wages.
On the other hand, Collins explained, wealthy persons and corporations are now warehousing wealth by hiding it in donor-advised charity funds — a misleading name for a loophole which allows them to receive the tax benefits of making a charitable donation, but without actually relinquishing control over their money.
Collins offers several potential solutions to combat this loophole in a report he co-authored with colleagues Helen Flannery and Josh Hoxie. Some examples include stricter rules governing philanthropy and withholding tax breaks until the money in donor-advised charity funds is moved to a qualified charity, among others.
To download the full report, click here.
To watch the full interview, click here.
Follow Chuck Collins on Twitter.