The financial hardships of Trump’s friends

Trumponomics is a thin veneer of an excuse for giving America’s rich – already richer than ever – whatever they want, while sticking it to everyone else.

SOURCERobert Reich
Image Credit: AP

The Environmental Protection Agency recently granted to an oil refinery owned by Carl Icahn a so-called “financial hardship” waiver. The exemption allows the refinery to avoid clean air laws, potentially saving Icahn millions of dollars.

Icahn is not exactly a hardship case. According to Bloomberg’s Billionaire Index, his net worth is $21.8 billion. Over the last four decades as a corporate raider, Icahn has pushed CEOs to cut payrolls, abandon their communities, and outsource jobs abroad in order to generate more money for him and other investors.

In 1985, after winning control of the now-defunct Trans World Airlines, Icahn stripped its assets, pocketed nearly $500 million in profits, and left the airline more than $500 million in debt. Former TWA chair C.E. Meyer Jr. called Icahn “one of the greediest men on earth.”

No single person has done more to harm America’s working class than Carl Icahn. Not surprisingly, Icahn was a Trump backer from the start, and has benefited immensely from Trump’s presidency.

When Trump first talked with Scott Pruitt about running the EPA, Trump told Pruitt to meet with Icahn. As Icahn later recounted, “I told Donald that [Pruitt] is somebody who will do away with many of the problems at the EPA.”

Trump then made Icahn his special regulatory adviser, until lawmakers raised concerns about potential conflicts of interest.

Icahn has found other ways to make money off the Trump presidency. Days before Trump announced hefty tariffs on foreign-made steel, Icahn sold off $31.3 million in stock he owned in the Manitowoc Company, a manufacturer of steel cranes. After Trump’s announcement, the company’s shares tumbled.

Icahn says he had no inside knowledge of Trump’s move, but why should anyone believe him? The Trump presidency is awash in conflicts of interest, lies, payoffs to friends, insider deals, and utter disdain for the public.

Icahn’s steel deal was chickenfeed relative to the billions he’ll pocket courtesy of Trump’s tax cut. Icahn is said to have spent $150 million lobbying for it, which makes it one of his best investments so far.

Meanwhile, real financial hardships are bearing down on Americans who are getting no help at all. Flint’s water is still unsafe. Much of Puerto Rico is still in the dark. Last week, HUD Secretary Ben “Poverty-Is-A-State-Of-Mind” Carson proposed large rent increases for families receiving housing assistance, explaining that help to the poor “creates perverse consequences, such as discouraging these families from earning more money.”

Rubbish. Low-income Americans are already working hard, many paying half their monthly incomes in rent.

The Trump administration is also allowing states to demand that Medicaid recipients work, although there’s no evidence Medicaid deters people from working. In fact, many low-income Americans are able to work only because they have access to health care via Medicaid.

Trump and his enablers on Capitol Hill are proposing that people receiving food stamp work at least twenty hours a week. Yet over 40 million Americans – including many children and disabled – are already struggling with hunger, and food stamps average only $1.40 per person per meal.

In contrast to their argument that the poor need less help in order to work harder, Trump and his enablers justify regulatory and tax handouts to Carl Icahn and his ilk by arguing the rich need more in order to work harder.

But despite the regulatory “relief” and giant tax cut they’re getting, America’s rich aren’t investing more than before.

Corporations have been using savings from the tax cut to buy back their shares of stock at a record pace. Icahn has been among the biggest investors pushing them to do so because buybacks raise stock prices, thereby putting even more money in his pocket.

It’s doubtful Icahn will use the savings from his “financial hardship” waiver to invest in more oil refineries. Profit margins in refining are plummeting.

In reality, Trumponomics is a thin veneer of an excuse for giving America’s rich – already richer than ever – whatever they want, while sticking it to everyone else.

We are rapidly becoming a nation of just two groups. The first are those without any voice, vulnerable to real financial hardship, who are losing whatever meager assistance they had. This includes many white working-class Trump supporters.

The second are those like Carl Icahn – powerful enough to extract benefits from Trump and the GOP by claiming they need such incentives in order to invest. But their neediness is a hoax, and the only significant investments they’re making are pay-offs to politicians.

Far more Americans belong to the first group than to the second. The question is when they will realize it, and vote accordingly.


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Robert B. Reich is Chancellor's Professor of Public Policy at the University of California at Berkeley and Senior Fellow at the Blum Center for Developing Economies. He served as Secretary of Labor in the Clinton administration, for which Time Magazine named him one of the ten most effective cabinet secretaries of the twentieth century. He has written fourteen books, including the best sellers "Aftershock", "The Work of Nations," and"Beyond Outrage," and, his most recent, "Saving Capitalism." He is also a founding editor of the American Prospect magazine, chairman of Common Cause, a member of the American Academy of Arts and Sciences, co-founder of the nonprofit Inequality Media and co-creator of the award-winning documentary, Inequality for All.