In the final ad of Donald Trump’s 2016 campaign, the Republican nominee informed America that “those who control the levers of power in Washington” do not “have your good in mind,” as a sign reading Wall St. flickered across the screen. Moments later, the chief executive of Goldman Sachs appeared, cast as an embodiment of the global elite that has “robbed our working class.”
In the third year of Donald Trump’s presidency, his signature legislative achievement provided Wall Street’s six largest banks (JPMorgan Chase, Bank of America, Citigroup, Wells Fargo, Goldman Sachs, and Morgan Stanley) with $18 billion in tax savings. According to the Century Foundation’s calculations, if that money had instead gone to America’s neediest families, there would be 3.2 million fewer American children living in poverty.
That figure comes courtesy of Bloomberg News. Combing through the big banks’ earnings statements, the outlet found that their effective tax rates ranged from 18 to 20 percent in 2019, down from an average of 30 percent before Trump’s tax cuts went into effect. Wall Street’s windfall from the law last year was even larger than it had been in 2018, when the banks netted $14 billion, thanks to our president and his allies in Congress.
To the extent that there is any civic-minded argument for giving giant tax breaks to megabanks, it is that doing so will enable financial institutions to expand access to credit (and thus, juice economic growth). But the major banks’ outstanding loans grew at a mere one percent rate in 2019, down from 3 percent the year before. Meanwhile, the banks collectively laid off 1,200 employees, efficiencies that enabled the firms to deliver $21.5 billion in payouts to their (generally affluent) shareholders, a 14 percent increase on their previous haul.
On Wednesday, Trump took a moment to bask in his achievement. At a gathering with corporate leaders to celebrate his pseudo–trade deal with China, the president announced that JP Morgan had “just announced earnings and they were incredible,” adding, “I made a lot of bankers look very good.”