There is little mystery about why Donald Trump won the election last week. After billions of dollars in campaign spending by the two major-party candidates, it mostly came down to the price of a loaf of bread.
According to exit polls, two-thirds of voters were unhappy with the economy, and 69 percent voted for Trump.
Weeks before the election, The Economist issued a glowing assessment of America’s economy, calling it breathtaking, stellar and the envy of the world. Stock markets were setting records, inflation had fallen and unemployment was low. “Over the past three decades America has left the rest of the rich world in the dust,” the newspaper said. Even in Mississippi, the poorest state, the average worker makes more than their counterparts in the United Kingdom, Canada or Germany.
In February, the Federal Reserve Bank of St. Louis reported that wealth during the Biden administration grew “markedly” for all income groups in the U.S. from 2019 to 2022, with low-wealth groups enjoying the largest gains. The bank said wealth was at an all-time high for Black and Hispanic families.
But the all-time high was not that high. Black families still owned only 16 cents for each dollar of white wealth. And although inflation dropped from 9 percent at the beginning of Biden’s presidency to 2.4 percent in September, the benefits did not trickle down to the grocery store fast enough to influence voters.
The Economist warned that the greatest danger to the U.S. economy now is not President Biden’s policies but political acrimony. “America is not about to lose its economic dominance,” the British magazine wrote. “But, sooner or later, rotten politics will start to exact a heavy price, and by then, it will be hard to reverse course.” Consider it a fair warning.
Another problem, reported in May by researchers at Duke University, is that the racial wealth gap is growing. The most recent data, from 2019 to 2022, showed the mean gap in net worth between Black and white households rose 38 percent, far outpacing inflation. The study attributed this to the inability of Black families to accrue wealth and pass it down through generations.
But why do Black families have difficulty accruing wealth in the first place? “The gap between Black families and white families is rooted in historical practices and policies (like redlining) that systematically stripped wealth from Black families and facilitated wealth building among white families,” according to the Federal Reserve Bank of St. Louis. “Because of continued barriers and the intergenerational nature of wealth, it is very difficult for individuals or families to overcome the gaps.”
Kamala Harris might have struck a nerve when she promised to work for an opportunity economy, but her plans were not made explicit. For example, a progressive agenda would guarantee that every young American has an equal opportunity to succeed, with universal health care, free college and trade school tuition, tax credits for childcare, and a long-term program to improve K-12 education. The idea would be to guarantee equal opportunity but not equal results.
However, while such ideas are common in many developed nations ranked high in quality of life, they are red meat for conservatives to yell about socialism.
As I wrote before Trump’s election in 2016, there was evidence of “deep unrest among Americans who have reason to feel there is too little opportunity in our ‘opportunity society.’ There is every indication that our democracy has become an oligarchy. It is not the country we are promised in our social contract.”
Back then, wealthy entrepreneur Nick Hanauer warned his “fellow zillionaires” that there would be trouble ahead if the income gap was not narrowed. “I have a message for my fellow filthy rich, for all of us who live in our gated bubble worlds,” Hanauer wrote. “Wake up, people. It won’t last. If we don’t do something to fix the glaring inequities in this economy, the pitchforks are going to come for us. No society can sustain this kind of rising inequality.”
Next year, there will be an intensive debate over whether to extend the so-called Trump tax cuts of 2017. The Tax Policy Center points out that the cuts were skewed to the rich, with households in the top 1 percent of income receiving more than $60,000 while households in the bottom 60 percent received less than $500.
Trump has proposed extending the policies after further reducing the corporate tax rate and imposing steep tariffs on imported goods. The tariffs would raise consumer prices; Trump wants to pay for tax breaks by repealing the “green energy” tax credits in the Inflation Reduction Act. Those credits are creating jobs and lowering consumer energy bills across the United States, with most new jobs in red states and congressional districts.
The New York Times reports that Trump’s economic plans would push inflation back to 9.3 percent by 2028. According to the Tax Foundation, interest payments on $3 trillion of new national debt would eat into American incomes and economic growth.
What I wrote in 2016 remains true: The election was largely about the “legitimate desire of an economically suppressed segment of society to find a leader who will shake up the system that is rigged against them.”
One of the ironies is that, then as now, many economically disadvantaged voters chose one of America’s plutocrats to be their champion. How beholden will he be to the other billionaires who financed his campaign and to whom he has promised favorable treatment?
We should watch closely to see how much Trump cares about the people who have given him a second opportunity. Many of them simply want their first.
William S. Becker is executive director of the Presidential Climate Action Project and a former senior official at the U.S. Department of Energy.
