During economic crises the pattern repeats. In 1932, President Hoover left the American economy deep in the Great Depression. President Franklin Roosevelt ushered in the New Deal, including financial reforms and Social Security.

In 2008, President Bush left office during the Great Recession, leaving President Obama and the Democrats to deal with it. With some unpopular steps, the economy was turned around, with an expanding economy during the remainder of Obama’s two terms. Republicans and the Wall Street Journal’s editorials still criticize those years as “the slowest recovery ever.” What Obama’s critics conveniently omit is that the Obama administration was fought by congressional Republicans every step of the way. 

Senator McConnell failed in his goal to make Obama a “one term president,” but managed to become the “obstructionist in chief” for eight years. Thanks to Republican obstruction, the recovery was slower than it should have been. Nevertheless, it lasted throughout Obama’s two terms, enabling Trump to inherit a strong economy in 2016.

That economy is now in shambles, or at least a large part of it. We have what is popularly referred to as a “K-shaped recovery.” Some people are doing very well, upper income professional people who can work from home, for example. Financial markets are flirting with record highs, at least as of this writing.

In contrast, unemployment is a dismal 6.7%. Actual unemployment is undoubtedly much worse, as Bureau of Labor statistics doesn’t count those who have ceased searching for jobs. Unless the Congress acts, millions who depend on unemployment benefits stand to lose those benefits. Many small businesses have closed, some of them permanently. Essential workers still employed include health care workers, grocery and retail store clerks, and employees of local government who are exposed to health risks in order to receive their paychecks.

Long food lines are stark evidence of the plight of Americans who never before have had to depend on public assistance to get by.

Sure, the pandemic is the root cause of this staggering, uncertain economy. But it’s this administration’s incompetent management of the pandemic, exacerbated by the administration’s earlier ill-advised fiscal policy that has made this pandemic more difficult to manage, actually out of control.

The record federal assistance has enabled many who were hurt by this pandemic to pay their bills and keep financially afloat up to now. Even conservatives who normally oppose such federal expenditures agreed that this assistance was necessary.

But will this federal assistance continue? Republicans are starting to balk at rising federal deficits and public debt. 

The worst case scenario that a majority of economists warned of has occurred, namely tax cuts and increasing federal deficits during prosperity, leaving it even more difficult to spend federal money when it is urgently needed, like now.

Let’s review. When Trump took over, he inherited a strong economy that was characterized by a weakness that had been getting worse since the Reagan years, namely increasing income and wealth inequality. Economic prosperity gives the congress the economic and political cover to address this weakness, while reducing federal deficits. This is an “eat your spinach” approach that politicians are reluctant to take.

Instead of reducing annual federal deficits and paying down the public debt — at least relative to the size of the economy — the much ballyhooed Trump Republican 2017 tax bill cut taxes for corporations and the nation’s wealthiest citizens. This bill combined the worst of both worlds. It gave the economy a shot in the arm when it wasn’t needed. But worse, it unnecessarily increased the public debt and made income inequality even more unequal.

That 2017 tax bill was opposed by economists across the spectrum, with the exception of supply-side economic snake oil peddlers like Larry Kudlow and Peter Navarro.

This is not Ph.D. level economics. It is basic college sophomore level macroeconomics — at most intermediate level macroeconomics, combined with common sense. If it is a goal to reduce federal deficits and, depending on circumstances even run an annual budget surplus to apply to the debt, the time to do it is during economic prosperity. A structurally balanced budget — federal expenditures and receipts balanced over the course of a business cycle — creates the economic capacity and political cover to spend federal money when urgently needed, like now.

But a contrary scenario is not new; we have seen this movie before. Republicans have absolutely no problem expanding the public debt for purposes of cutting taxes, as with the 2017 tax bill. But when it comes to domestic programs to help people, Republicans express grave alarm; “we just can’t afford it.” That is exactly how this scenario is playing out now.

Republicans try to justify tax cuts under the fiction that “tax cuts pay for themselves.” It doesn’t work that way, but makes a good story for those who would like to believe that fairy tale.

There are times when tax cuts make sense. During recession, tax cuts for lower income and middle class workers increase consumption expenditures. An argument can be made that we could eliminate corporate taxes — which corporations tend to evade anyway — if compensated for by increased marginal tax rates on high income earners, including multi-million dollar salaried executives who run those corporations. But politicians won’t do the latter.

Cutting taxes for the nation’s wealthiest individuals and increasing the public debt during prosperity should be a definite “no, no.” But under Trump’s leadership, it was a “must-do.” Hence the fix that we’re in — the absolute necessity of further increasing the public debt to do what has to be done, to save small businesses and so many of our citizens from financial ruin.

With vaccines on the horizon, and an administration staffed with experienced and competent personnel, the economy will eventually recover. But sufficient implementation of a vaccine is still months away. Undoing the damage of the Trump administration will be a very heavy lift.

— John Waelti of Monroe, a retired professor of economics, can be reached at jjwaelti1@tds.net. His column appears Saturdays in the Monroe Times.