Beyond Tax Cuts For the Wealthy, How Trump Will Increase Income Inequality

Liberal pundits and many others in the mainstream media have pointed out how Trump’s tax cut proposals will be a huge boost for the uber-wealthy, thereby contributing further to the issue of income inequality. But beyond that, there are increasing reports about another way that the president-elect will likely contribute to the problem.

For some background, here is an excerpt from the Washington Monthly’s cover story by Barry Lynn:

In an October 2015 op-ed, she [Hillary Clinton] wrote that “large corporations are concentrating control over markets” and “using their power to raise prices, limit choices for consumers, lower wages for workers, and hold back competition from startups and small businesses. It’s no wonder Americans feel the deck is stacked for those at the top.”…

It was based on a substantial and growing body of research—much of it first presented in the pages of this magazine and since validated by the Obama administration’s own economists—that confirms that consolidation is at the root of many of America’s most pressing economic and political problems.

These include the declining fortunes of rural America as farmers struggle against Big Ag. It includes the fading of heartland cities like Memphis and Minneapolis as corporate giants in coastal cities buy out local banks and businesses. It includes plunging rates of entrepreneurship and innovation as concentrated markets choke off independent businesses and new start-ups. It includes falling real wages, as decades of merger mania have reduced the need for employers to compete to attract and retain workers.

Monopoly is a main driver of inequality, as super-fat profits concentrate more wealth in the hands of the few. The effects of monopoly enrage voters in their day-to-day lives, as they face the sky-high prices set by drug company cartels and the abuses of cable providers, health insurers, and airlines. Monopoly provides much of the funds the wealthy use to distort American politics.

Donald Trump hasn’t even been inaugurated as president yet. But we’re already seeing signs that his administration will not only fail to reign in monopolies, but that they will make the problem worse.

A couple of weeks ago I wrote about how Trump’s praise for Sprint was likely spurred by that company’s desire to get approval from his administration for their merger proposal with T-Mobile – combing the 3rd and 4th market leaders in that sector.

Tom Philpott says that yesterday Trump found time to meet with Bayer and Monsanto.

…the meeting involved German chemical giant Bayer’s $66 billion buyout of US seed/agrichemical giant Monsanto—a deal that will have to pass antitrust muster with Trump’s Department of Justice…Fox reports that Bayer CEO Werner Baumann and his Monsanto counterpart Hugh Grant met with the incoming president at Trump Tower in midtown Manhattan to promote the merger…

Baumann and Grant have plenty to be concerned about regarding possible antitrust obstacles to their mega-deal. As I’ve reported before, a combined Bayer-Monsanto would own 29 percent of the global seed market, and 25 percent of the global pesticide market. And if the pending merger between agribiz goliaths Dow and DuPont also wins approval, three enormous companies—the above two combined firms, plus Syngenta (itself recently taken over by a Chinese chemical conglomerate)—would sell about 59 percent of the globe’s seeds and 64 percent of its pesticides.

This morning, Trump had another meeting with a company that is involved in a potential merger.

AT&T Chief Executive Officer Randall Stephenson was spotted Thursday morning heading into Trump Tower along with Robert Quinn, AT&T’s senior executive vice president for external and legislative affairs.

The meeting isn’t public, but Bloomberg and other media outlets reported that the AT&T execs were scheduled to meet with President-elect Donald Trump to go over the company’s $85.4 billion bid for Time Warner, which Trump has said he opposes.

There has been speculation that Trump’s tirade against CNN (a subsidiary of Time Warner) at yesterday’s press conference might be related to the proposed Time Warner/AT&T merger – from the NY Post no less.

Nine days before CNN parent Time Warner will have to negotiate with Donald Trump’s antitrust cops, the cable news network got a dressing down by the President-elect.

The Post goes on to say that perhaps Trump’s attacks on CNN are designed to incentivize Time Warner to sell off the news organization because AT&T’s main interest is in their entertainment properties.

Trump considers himself the ultimate deal maker. While he doesn’t seem to have much interest in actually being president, he obviously loves having the power to make these big-time CEO’s grovel at his feet. I suspect that they’ll be more than willing to do that in order to bypass the tradition review process to get these mergers approved by various government institutions.

This is how business is likely to be done in a Trump White House.

Nancy LeTourneau

Nancy LeTourneau is a contributing writer for the Washington Monthly.