Ap Fact Check: Are Trump Policies Boosting The Us Economy
WASHINGTON President Donald Trump pitched a wildly off-base claim about economic growth Monday as the White House used selective statistics to build a case that the economy is doing much better than when Barack Obama was in office.
The attention on Obama comes as the ex-president steps back into the political arena on behalf of Democrats in the November elections. The White House dispatched economic adviser Kevin Hassett to rebut Obamas point that his policies helped end the Great Recession and put the economy on a growth path that Trump is now mostly benefiting from.
The chair of the White House Council of Economic Advisers Kevin Hassett addressed the nations economy in Tuesdays briefing. Video by PBS NewsHour.
Companies are much more optimistic and have increased spending on buildings and equipment, Hassett said. Americans are starting new businesses and the increase in startups is accelerating more quickly than it did under Obama, he added, and blue-collar jobs in mining, construction and manufacturing are growing more rapidly.
Yet some of the White Houses case is wrong, exaggerated or lacks context:
When Can Americans Expect Stimulus Checks
Senate Majority Leader Mitch McConnell said that Americans can expect a new coronavirus stimulus bill at the beginning of 2021 – but not immediately following the election.
We probably need to do another package, certainly more modest than the $3trillion dollar Nancy Pelosi package, McConnell told Hugh Hewitts radio show.
I think thatll be something well need to do right at the beginning of the year.
McConnells statement contradicts that of President Trumps view on when to expect the next stimulus package – vowing on Friday, October 30, to deliver a tremendous stimulus package immediately after the election.
The stock market has done remarkably well under Trump, a nugget that the president continues to remind people of.
Trump is predicting a V-shaped recovery after the economy shrank at a 32.9% annual rate between April and June due to coronavirus.
A V-shaped recovery means the broader economy will recover quickly, returning to pre-recession levels without large sectors or groups falling behind.
To achieve this the presidents strategy is to rely on tax cuts and business deregulation.
Federal Budget Shutdown Of 20182019
On December 22, 2018, the federal government went into a partial shutdown caused by the expiration of funding for nine executive departments. The lapse in funding occurred after Trump demanded that the appropriations bill include funding for a U.S.-Mexico border wall. The shutdown ended on January 25, 2019, with the total shutdown period extending over a month, the longest in American history. By mid-January 2019, the White House Council of Economic Advisors estimated that each week of the shutdown reduced GDP growth by 0.1 percentage points, the equivalent of 1.2 points per quarter. About 380,000 federal employees were furloughed, some public services were shut down, and an additional 420,000 employees for the affected agencies were expected to work with their pay delayed until the end of the shutdown, totaling 800,000 workers affected out of 2.1 million civilian non-postal federal employees.
A January 2019 Congressional Budget Office report estimated that the 35-day partial government shutdown cost the American economy at least $11 billion, including $3 billion in permanent losses the CBO estimate excluded indirect costs that were difficult to quantify. The shutdown had an adverse effect on the budgets of state and local governments, as states covered some federal services during the shutdown.
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Reduce Corporate And Investment Taxes
Trump’s tax plan, the Tax Cuts and Jobs Act, lowered the corporate tax rate from 35% to 21%. This was the lowest rate since 1939.
This change may not be as dramatic as it sounds, though. Most corporations make good use of legal deductions.
The Congressional Budget Office found that a more cost-effective method would be to cut business payroll taxes and increase unemployment aid. Governments should target any stimulus to small businesses, which produce 65% of all new private-sector jobs.
Trumps Most Effective Lie Has Been The Economy But It May Have Lost Its Punch
WASHINGTON President Donald Trumps most frequent and most effective lie, that he had built the greatest economy in history, appears to be losing its punch at the worst possible time for him.
Trump has never had overall favorability ratings in his entire three years and nine months in office, but for most of that time has enjoyed the perception that he was doing a good job handling the economy. Now, with his election for a second term only days away, just about as many Americans think he is doing a bad job.
A Gallup poll Thursday found that Trumps approval for his handling of the economy has fallen to 52%, from a high of 63% just this January.
A CNBC poll this month found his approval on the economy at 47-47, compared to the 51-36 advantage he had two years ago.
Reality has caught up with him. He had a huge lead in terms of peoples confidence in him as an economic manager, and he blew it, said Justin Wolfers, a University of Michigan economics professor. One issue is that people dont trust what he says anymore. Another is, well, look around things are pretty grim, and people know this. You cant bluster past the reality that people are having their hours cut, millions of families are getting by on one fewer paycheck, and no one feels confident that they know whats coming next.
If it is on your watch, you get the upside and the downside, said Peter Hart, a Democratic pollster. Fair or unfair, that is how it works.
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A Look At Trump’s Economic Legacy
Examining the outgoing president’s policies from tax cuts to trade wars.
President Donald Trump campaigned as a billionaire businessman and champion of the working class with the economic prowess and deal-cutting skills that politicians in Washington, D.C., lacked.
He summed up his position neatly during the campaign: “I’ll be the greatest jobs president that God ever created.”
On the campaign trail, Trump claimed to be laser-focused on bringing back manufacturing and mining jobs, renegotiating trade deals that led to work disappearing overseas and curtailing immigration.
His Clintonian tack of “it’s the economy, stupid,” despite the myriad scandals and investigations that dogged him, largely worked as GDP grew at a healthy clip, the stock market soared and unemployment rates hit a half-century low, until the coronavirus pandemic gutted the job market.
Yet as he leaves after his one-term tenure, Trump has become the first president since Herbert Hoover during the Great Depression to depart office with fewer jobs in the country than when he entered.
Economists say Trumps economic legacy will be defined by his failure in leadership during the COVID-19 pandemic that exacerbated the financial downturn, domestic policies that overwhelmingly benefited the wealthy, and international trade policies that hurt U.S. industry while simultaneously alienating allies.
Here is a look at the outgoing president’s legacy on the U.S. economy.
Effects On Corporate Taxation And Behavior
The Institute on Taxation and Economic Policy reported in December 2019 that:
- The Tax Act lowered the statutory corporate tax rate from 35% to 21% in 2018, although corporations continued to reduce their taxes below the statutory rate via loopholes. The Tax Act closed some old loopholes, but created new ones.
- The effective corporate tax rate in 2018 was the lowest rate in 40 years, at 11.3%, versus 21.2% on average for the 2008â2015 period.
- Of 379 profitable Fortune 500 corporations in the ITEP study, 91 paid no corporate income taxes and another 56 paid an average effective tax rate of 2.2%.
- If the 379 businesses had instead paid the 21% tax rate, it would have generated an additional $74 billion in tax revenue.
The Economic Policy Institute reported in December 2019 that:
- Working people saw no discernible wage increase due to the Tax Act. The tight labor market and higher state-level minimum wages can explain the wage growth in 2018.
- The Tax Act has not increased business investment, with the small increase in 2018 a “natural bounceback” from a weak 2015â2016, and a sizable decline in 2019.
- Companies used much of the tax benefit for stock buybacks, to the tune of $580 billion in 2018, an increase of 50% from 2017.
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Foreign Profits Dont Generate Domestic Investment Windfalls
The USCBC report claims that U.S. companies earn profits on their Chinese investment that they then funnel into increased American investment. But again, this assumption ignores the crucial distinction between economies where business investment is constrained by high capital costs and economies where investment is constrained by weak demand. Many multinational American companies are already sitting on huge hoards of cash for which they cannot find a productive use: that hardly seems to indicate that American businesses need foreign profits to fund even more investment at home.
Economic Impact Of Trade Policies
In January 2020, the Congressional Budget Office explained how tariffs reduce U.S. economic activity in three ways: 1) Consumer and capital goods become more expensive 2) Business uncertainty increases, thereby reducing or slowing investment and 3) Other countries impose retaliatory tariffs, making U.S. exports more expensive and thus reducing them. CBO summarized the economic impact of Trump’s tariffs as follows:
- âIn CBO’s estimation, the trade barriers put in place by the United States and its trading partners between January 2018 and January 2020 would reduce real GDP over the projection period .
- The effects of those barriers on trade flows, prices, and output are projected to peak during the first half of 2020 and then begin to subside.
- Tariffs are expected to reduce the level of real GDP by roughly 0.5 percent and raise consumer prices by 0.5 percent in 2020.
- As a result, tariffs are also projected to reduce average real household income by $1,277 in 2020.
- CBO expects the effect of trade barriers on output and prices to diminish over time as businesses continue to adjust their supply chains in response to the changes in the international trading environment. By 2030, in CBO’s projections, the tariffs lower the level of real GDP by 0.1 percent.â
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Economic Recovery Under Obama
At CNN, we start with the facts. Visit CNN’s home for Facts First.Facts First:If you look solely at the average rate of GDP growth, it’s true that that the economy recovered more slowly after the Great Recession than during previous rebounds. But growth hasn’t been exceptionally better under Trump.GDP growthexperienced since World War II
Trumps Economic Scorecard: 3 Years In Office
President Trump’s Economic Scorecard
President Trump has been in office for three years, which is enough time to analyze how the economy is doing vs. his statements on how it would perform. The U.S. Bureau of Economic Analysis released its first estimate for 2019s fourth quarter GDP growth and for the full year. For the fourth quarter GDP growth came in at 2.1%, which was the same as the September quarter and for the full year it fell from 2.9% in 2018 to 2.3% last year.
It appears that the tax cuts that started in 2018 helped for one year but dont have much of a carryover effect. The promise that they would pay for themselves has not materialized as the Federal budget deficit has ballooned to $1 trillion levels not seen in a non-recessionary environment.
The outlook for a slower economy caused the Fed to lower interest rates and increase its balance sheet, which led to the stock markets rallying in 2019 even when corporate profits were essentially flat. While the Phase One trade deal has been signed with China, its outlook was murky even before the Wuhan coronavirus hit. Its goals looked to be overly ambitious and didnt tackle the really tough items on the agenda.
Yearly GDP growth
GDP growth hasnt reached Trumps 3% or higher goal
Unemployment rate is about as low as it can go
Yearly job growth
Job growth has plateaued
Manufacturing job growth
Dow 30 Industrials
S& P 500
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A Failure To Help Small Businesses
Even before shelter-in-place orders were commonplace across states, businesses were noticing sharp declines in consumer activity. By the beginning of April, 24 percent of small businesses had reported temporarily shutting down. By mid-May, more than 100,000 small businesses had closed permanently, representing 2 percent of the nations total. The Paycheck Protection Programa provision in the CARES Act intended to help employers keep operations running despite revenue shortfallswas plagued by reports of large, publicly traded companies receiving massive sums while small businesses were left without help. A May report released by the Small Business Administrations inspector general found that the Trump administrations implementation left out minority-owned, woman-owned, and rural businesses. Despite a second round of funding through the program, small businesses are still suffering immensely: Some projections estimate that small business closures could approach 7.5 million if businesses are forced to weather the economic impacts of the outbreak on their own. Though the HEROES Act would strengthen the PPP and provide other assistance to small businesses, much of the economic damage could have been avoided entirely had the Trump administration acted more quickly to contain the outbreak.
End Outsourcing And Bring Back Jobs From Overseas
America lost 31.4% of its manufacturing jobs between 2000 and 2011 these were steady jobs that, on average, paid $28.85 per hour.
U.S. companies outsourced many of these jobs to save money. But robotics, artificial intelligence, and bio-engineering also made some jobs obsolete, so ending outsourcing may not bring back all the jobs that were lost. It’s possible that government-sponsored training for these specialties might create more jobs for U.S. workers than a trade war.
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Consumer Spendingup But Underperforming
American consumers are the backbone of the US economy and are not easily fazed. Although consumers sharply cut back on spending at the start of the pandemic, they were quick to reopen their wallets in May and June once stimulus checks and unemployment benefits came to their aid. Retail spending on goods, particularly through online retailers, rebounded swiftly. Even with a quick recovery, though, consumer spending has grown less under Trump than under any of the prior five presidents.
President Donald Trump Inherited A Strong Economy And It Continued To Grow At A Healthy Rate During His First Three Years In Office Then The Covid
At the start of Donald Trumpâs presidency in January 2017, the economy was healthy.
Employers had added jobs for 76 months straight â the longest hiring streak on record at the time â and unemployment was just 4.7%, a 10-year low. Corporate profits were near all-time highs, and so were stocks. Overall, gross domestic product was growing around 2.5% a year â a modest rate for the worldâs largest economy. Not everything was rosy: the federal debt was at its highest level since the 1950s. But by most metrics, it was hard to deny: the economy was on solid footing. And fortunately for Trump, the growth continued from there.
Then came the pandemic.
Below, weâve tracked 10 indicators to show how the economy evolved under each president from Ronald Reagan to Trump. Keep in mind, each presidency started under different circumstances. George W. Bushâs first year in office was plagued by the dot-com bust and the September 11th attacks. Barack Obamaâs started with the Great Recession, following a devastating housing crash and a global financial crisis. Despite these crises, however, most recent presidents have presided over a growing economy during their time in office. The Trump presidency will be characterized by the countryâs response to the Covid-19 pandemic, which is still playing out both as a health crisis and an economic one.
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