In the waning months of the 2016 presidential campaigns, candidate Trump presented a plan to address the economic challenges facing African-Americans. In his “New Deal for Black America,” Trump pledged to address the problems affecting the “inner city,” including poverty, unemployment and crime. Unfortunately, since assuming office, the actions the President has taken have gone counter to his promise to lift up African-American communities. Moreover, President Trump is oblivious to the clear signs that his plan misses the mark entirely.
The rhetoric Trump used to present his plan—and the policy assumptions underlying that rhetoric—rely on tropes that are all too familiar and all but accurate: chronic self-inflicted depravity, self-fulfilling violence. These platitudes situate the principle culprit for the challenges facing the Black community as none other than their own choices. The plan’s central flaw is that it overlooks one significant and unacceptable truth: that the economic challenges facing Black America today can be traced backed to practices fostered by both the private and public sector, including within our own federal government.
Centuries of discriminatory practices served to erect significant barriers that have prevented Black households from building and sustaining wealth. For example, at the same time the Federal Housing Administration was expanding homeownership opportunities to working Americans in the middle of the twentieth century, it also instituted “redlining” practices, which restricted access to mortgages for Black households who could otherwise live in the communities of their choice. The impact of redlining persists still today, evidenced by the fact that whereas 71 percent of White households own their homes, only 41 percent of Black households can say the same. Of course, it is no coincidence that many of these redlined communities are the same ones President Trump refers to when citing the danger and lawlessness in the “inner cities” that he’s most concerned about. Unfortunately, redlining is one policy among many that have restricted Black families from fully participating in government-supported wealth-building activities, such as homeownership, higher education and retirement savings savings.
This stained history of public policy has contributed directly to an ever-growing racial wealth divide between Black and White households. The median wealth for Black households stands at $1,700, compared to $116,800 for their White counterparts. As troubling as these numbers are today, they’re brought into sharper focus when considering that the median wealth of African-American households has actually declined over the past 30 years, when net worth for Black households at the median totaled $6,800 (compared to $102,200 for White households). Far from living in a “post-racial” society, these findings illustrate that if median household wealth continues to grow at current rates, the racial wealth divide will literally never close.
Acknowledging these regrettable truths should be step number one in any plan meant to address the economic challenges facing African-American households. Rather than just denouncing inner city blight, President Trump should take stock of how past and present policies must be removed or reformed to close the racial wealth divide. Unfortunately, despite his campaign rhetoric claiming that the pain African-Americans have experienced over the years was due to policies enacted by his opposing party and that only he could fix that hurt—an approach that was on full display last August when he directly asked African-American voters “What the hell do you have to lose?” by supporting his candidacy—the proposals Trump has advanced thus far will likely widen the persistent wealth divide, rather than closing it.
Donald Trump’s pitch to black voters: “What the hell do you have to lose?” https://t.co/JBVJBFeFzq pic.twitter.com/T7WQsYAOGz
— CNN (@CNN) August 19, 2016
For example, his executive action to roll back financial regulations and weaken the landmark Dodd–Frank Wall Street Reform Act—which established the Consumer Financial Protection Bureau—is a step in the wrong direction. The Bureau was established as a direct response to the financial crisis of 2008-2009—during which African-Americans lost more than half their wealth. Since opening its doors, the Bureau has worked tirelessly to protect consumers against the same predatory financial practices that caused and contributed to the recession, and that are more likely to be prevalent in African-American communities, such as high-cost subprime mortgages, and payday loans.
If President Trump is successful in doing away with these protections, we expect that the same products that brought our economy to the brink would once again flood the same African-American communities hardest hit by the Great Recession.
Fortunately, there are steps President Trump can take right now to ensure that his policies and those of the broader federal government don’t further erode the wealth-building potential of African-American households. Not unlike the action he recently took on financial regulations, President Trump should issue an executive order to authorize a government-wide audit to rigorously assess how current federal public policies and programs are affecting the racial wealth divide. Given the role that federal policies have played in fueling the racial wealth divide, this audit should raise public awareness of how public policy has contributed to the economic realities of African-American communities and other communities of color. Moreover, it should provide the information needed to deliberately craft policy solutions that remedy the situation.
In particular, we recommend that the president appoint a special advisor or ombudsperson to not only coordinate the audit but also serve as an advisor to the president on unilateral actions he and his administration can take to reduce the government’s role in expanding racial economic inequality. In authorizing this action, the president should instruct his ombudsperson to utilize methodologies and empirical tools, such as the Racial Wealth Audit developed by the Institute for Assets and Social Policy at Brandies University and Demos, to facilitate a high-quality analysis of the economic impact current federal policies and programs are having on the racial wealth divide.
In addition to these two steps, the president’s order should also direct the ombudsman to develop and release a public report that details the results of the audit and outlines administrative recommendations for the federal government to reduce the role it plays in the growing the racial wealth divide. As part of this effort, the report should elevate policies and programs that are actively helping to close the divide so that they can be scaled and resourced for greater impact. Lastly, as a way to foster greater public debate and demonstrate legislative leadership, the president should also present Congress with a legislative agenda that outlines key proposals to close the racial wealth divide.
If President Trump is serious about creating a better economic future for African-Americans and other communities of color, then he must seek to tear down structural barriers to African-American wealth creation and stability. Only then will our nation be able to laud a plan aimed at enhancing the economic position of African-Americans as a “New Deal.”
