As a part of the Socialist and Marxist Studies Lecture Series, Garret Martin, the director of the Maine Center of Economic Policy, gave a lecture last Thursday, Oct. 11, about the impact that President Donald Trump’s economic plans have had on the state of Maine.
According to The Maine Center of Economic Policy (MECEP) website, the organization is “a nonpartisan research and policy organization dedicated to improving the economic well-being of low- and moderate-income Mainers.”
Based on his work with the organization, Martin shared experiential analysis of how he understands that Trump’s tax policies can have a direct impact on Maine.
The overarching theme of the talk was that through Trump’s new policies, economic inequality may increase and the ability of families to be economically secure can be hindered at the state and national level. The new tax policy is theoretically based on “trickle down economics,” a concept that was introduced by President Ronald Reagan in the 1980s.
Trickle down economics revolves around a core principle of reducing taxes on businesses and the wealthy, whose added revenues will pass down to the less wealthy through increased economic activity, such as loans and investments.
The federal tax plan and budget has three important impacts on Maine, according to Martin’s lecture. First, one-third of our state’s spending is done with money from the federal government. Second, transfer payments — like welfare and social security — accounts for about 25% of personal income in Maine, as opposed to just 17% nationally. This is largely due to the fact that Maine has a large elderly population. The third reason is the fact that there is a ripple effect through the economy, meaning that a cut in the Supplemental Nutrition Assistance Program (SNAP), for example, would have a negative impact not only on the people but the businesses that rely on the people using that assistance with their business.
All of this means that any cut in the federal budget or in taxes will directly impact the state of Maine due to our reliance on this money.
Much of what goes into budgets or tax policy is the decision of “where the money is coming from” and from there “where is it going to go,” according to Martin. For Trump, the answer to that question has been growing the economy through cutting taxes. Unfortunately, the cuts made have either little beneficial consequence for most of the people or the provisions hurt people with little earnings, according to Martin.
Martin emphasized that the consequence of this is an increase in economic inequality by further ingraining an economic system that primarily benefits the rich and big businesses. This also results in large costs since this new tax cut costs around $1.5 trillion dollars which gives Congress the dilemma of paying for these cuts. The proposed solutions to this dilemma, in turn, will cut programs that help the economy. Proposed cuts include energy assistance and Supplemental Nutrition Assistance Program (SNAP). Cuts to both programs would affect thousands of Mainers.
Maine has had similar plans proposed at the state level. Since the beginning of Gov. Paul LePage’s tenure, he has initiated tax cuts which have left a $640 million hole in the state budget. In turn, costs are then heaped onto local municipalities and towns.
Martin emphasized that tax policy matters for the issues of inequality, strength of the economy and access to resources to invest. This new plan creates barriers to accessing programs that are supposed to help get people back on their feet. He finished his lecture with a notion of hope, suggesting that the results of new economic policies are starting to become visible issues for many Mainers.
“Citizen action and awareness is what really makes the difference,” Martin said. “And we are now seeing this with referendums and through voting.”