The U.S. economy and the 2018 midterm
What’s the problem?
The Trump Administration’s achievements include an unemployment rate that has decreased significantly, a growing U.S. economy and an inflation of costs that has helped achieve the Federal Reserve’s 2 percent target.
Despite all that, there are still several economic issues to consider for the upcoming midterm election.
Jobs are increasing, wages are not
Tax cuts
A quick rundown
Deficit: Refers to the annual difference between government spending and government revenue. The government collects revenue through taxes and uses the money collected on programs such as health care. If the government spends more than it is able to take in, a deficit occurs. If the opposite happens, it runs a surplus.
Tariff: A tax on a good produced by another country that is imported into the U.S. through local businesses.
U.S.-China Trade War: The U.S. and China are currently in a trade war in which each of the world’s two biggest economies are continuously imposing more tariffs on thousands of goods from each other.
The status of international trade
Reducing the U.S. trade deficit was one of President Trump’s main economic goals, but things aren’t going to plan.
China has had the advantage of lower tariffs on its goods and had shipped products into the U.S. at very low prices, particularly in contrast to goods from local business. The Trump administration is reverting this by imposing sweeping tariffs, a decision that has been reflected back on U.S. goods imported into China by the Chinese government.
Both governments have since imposed more tarrifs as the trade war escalates. Although Trump claims that this is in the interest of U.S. businesses, the “losers” of the war will most likely be consumers from U.S., China and possibly the rest of the globe.
Where Democrats and Republicans stand
Democrats are worried. The increase in federal deficit could lead the Trump administration to cut funding on federal programs such as Social Security and Medicare, programs that aim to help working and middle class Americans.
Republicans, on the other hand, have made major changes since Trump signed the new Republican tax cut bill in 2017. The tax cuts under the current Republican leadership has the federal deficit at $779 billion, the largest deficit since 2012’s recession.
At the rate that it’s going, the U.S. government will be facing a debt of $1 trillion by 2019. According to Vox, Republicans are blaming Democrats for the deficit.
