Will Trump Tax Cuts for the Rich Blow a Hole in the 'Rock-Solid Labor Market' Left by Biden?
"If he pursues trillions in tax cuts for the wealthy and implements the proposals to slash public investments that people like Musk have championed, the labor market will surely deteriorate and workers will suffer."
Job figures released Friday showed that the U.S. labor market rebounded strongly last month following a storm-ravaged October, with the economy adding 227,000 jobs and average hourly earnings rising by a higher-than-expected 0.4%.
But observers warned that the economic agenda of President-elect Donald Trump and the incoming Republican Congress—particularly the massive tax cut package they plan to ram through early next year—could undermine job market progress made under the Biden administration in the aftermath of the Covid-19 crisis.
"The Biden administration is handing off a rock-solid labor market after their strategic investments strengthened our economy and ushered in the fastest recession recovery on record," said Lindsay Owens, executive director of the Groundwork Collaborative. "President-elect Trump would do well to continue to invest in the workers and communities that have powered this resilience."
"But if he pursues trillions in tax cuts for the wealthy and implements the proposals to slash public investments that people like [Elon] Musk have championed," Owens added, "the labor market will surely deteriorate and workers will suffer the consequences of these choices."
Rep. Brendan Boyle (D-Pa.), the top Democrat on the House Budget Committee, similarly warned Friday that "while Democrats delivered a historic recovery with millions of new jobs under President Biden, Donald Trump and his far-right allies want to take us backward."
"Trump's promises are nothing but a con," said Boyle. "He's pushing middle-class tax hikes while handing massive breaks to his billionaire donors, just like he's done before. Families like mine know the truth: Trump would sell out millions of workers in a heartbeat to line the pockets of the ultra-wealthy. House Democrats won't stand by while Trump sabotages our economy. We'll fight to protect the progress we've made and ensure working families continue to come first."
"Don't let them fool you. His plan of vengeance to deport millions of undocumented workers and impose tariffs will not create jobs."
The U.S. economy has added an average of 173,000 jobs monthly over the past three months, Economic Policy Institute senior economist Elise Gould noted in an analysis of the new Labor Department figures.
"Nominal wage growth held steady at 4.0% over the year," Gould observed. "This rate is in line with the pace of productivity improvement over the last year and a stubborn low labor share of corporate sector income. Importantly, it means that real average wages continue to rise as they have the last 18 months."
The new data came as congressional Republicans and Trump's billionaire-dominated transition team and Cabinet choices continued to map out their agenda for the coming year, with tax cuts at the center.
"Their top objective is to extend the 2017 Trump tax law and prevent $3.3 trillion in tax breaks from expiring at the end of 2025," NBC Newsreported earlier this week, detailing GOP plans to pass a "huge party-line bill" via the filibuster-proof reconciliation process.
A Congressional Budget Office analysis published Wednesday detailed how an extension of soon-to-expire provisions of the 2017 tax law—a measure that disproportionately benefited the rich—would shrink the U.S. economy, bolstering concerns about the potentially damaging impacts of the Trump-GOP agenda.
Prior to the November election, the research firm Moody's Analytics warned that a Republican sweep would likely mean "the economy suffers a recession beginning in mid-2025," resulting in 3.2 million fewer jobs and a higher unemployment rate by the end of Trump's four-year term.
Moody's argued that Trump's push for tariffs, corporate tax cuts, and the mass deportation of undocumented immigrants would broadly harm the economy, driving up inflation and pushing down Gross Domestic Product (GDP) and job growth.
While corporations would likely "navigate things reasonably well" under a Republican-dominated government, Moody's said, ordinary households would "do less well financially."
"The typical American household's real after-tax income is approximately $2,000, or 1.4%, lower by the end of Trump’s term in this scenario than in the baseline," the firm projected.
Sen. Martin Heinrich (D-N.M.), chairman of the Joint Economic Committee, said in a statement Friday that Trump "was the first president since World War II to leave office with fewer jobs than when his administration started."
"And his disastrous policies will hurt our economy once again," said Heinrich. "Don't let them fool you. His plan of vengeance to deport millions of undocumented workers and impose tariffs will not create jobs. It will not support our manufacturers, farmers, or small businesses. And it certainly will not grow our economy. It will only create an unmitigated disaster for everyday Americans who will struggle to make ends meet."
