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
By Annalyn Kurtz and Tal Yellin, CNN BusinessPublished October 28, 2020Updated October 29, 2020
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.
The Obama Economy Vs The Trump Economy
Thursday, November 29, 2018
During his final days in office, I gave a thumbs-down assessment of Barack Obamas presidency. Simply stated, he increased the burden of government during his tenure, and that led to anemic economic numbers.
Now the economy seems to be doing a bit better, which is leading my friends on the left to make two impossible-to-reconcile claims.
Ive previously explained that the first argument doesnt hold water. Today, lets address the second argument.
Writing in the Wall Street Journal, former CEO Andy Puzder claims that Trump easily wins over Obama when you look at the numbers:
For eight years under President Obama, the growing burden of government suppressed the economic recovery that should have followed the recession of 2008-09. Mr. Obama nonetheless has claimed responsibility for todays boom, asking Americans in September to remember when this recovery started. Yet it wasnt until President Trump took office that the economy surged. The result is a rising tide that is lifting boats across every class and region of the country. Today unemployment rests at 3.7%, near a 50-year low. Since the government began reporting the data, unemployment has never been as low as it is today for African-Americans, Latinos, Asians and people with only a high-school education.
Stock Market Has Reached Record Highs
The highest closing record of the Dow Jones industrial average, the index of 30 top U.S. companies, was reached in February, after investors appeared to be encouraged that the trade wars initiated by Mr. Trump were being resolved. Recent interest-rate cuts in 2019 also contributed. This March, the Dow fell a record 2,013.76 points to 23,851.02, after it became clear that the U.S. economy would lock down because of the pandemic. That drop was followed by two more record-setting point drops.
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Ten Actions That Hurt Workers During Trumps First Year: How Trump And Congress Further Rigged The Economy In Favor Of The Wealthy
The tax cut law that President Trump boasts will make his wealthy friends a lot richer is just the latest in a series of betrayals of working people by the administration and Congress since Trump took the oath of office on January 20, 2017. In addition to passing a massive tax cut for wealthy business owners, Trump and Republicans in Congress have rolled back important worker protections, advanced nominees to key administration posts who have a history of exploiting working people, and taken other actions that further rig the system in favor of corporate interests and the wealthiest Americans.
Here are the 10 worst things Congress and Trump have done to undermine pay growth and erode working conditions for the nations workers.
Tax Cut And Jobs Act Deregulation And National Debt
Even before the virus further exacerbated U.S. income inequality, some experts say Trumps economic policies favored the wealthy — and left the poor and middle class behind.
His Tax Cuts and Jobs Act in December 2017 provided major tax breaks to corporations and wealthy individuals. The policy, among other things, reduced the corporate income tax rate from 35% to 21%.
Frankel called the policy “beyond ironic” for a president “who campaigned in 2016 on being the champion of the working man or working person and campaigned on ‘draining the swamp’ in Washington.”
Shierholz said this policy “absolutely increased inequality” and the “vast majority of the benefits of those tax cuts went to the already very wealthy.”
The economists also noted that the policy came at a time when unemployment was relatively low and the economy in good shape.
“That’s not the time to be giving away trillions of dollars to the wealthy,” Frankel said. “When you have a bad shock like the global financial crisis of 2008-09 or like the coronavirus crisis that we’re still going through — that’s the time to increase government spending and expansionary fiscal policy, but you lose the ability to do that if you gave it away.”
NYU’s Bowmaker noted that some “can make the case that the corporate tax rate was a little bit too high” and would welcome the tax cuts.
Despite his goal, the debt has ballooned under Trump. The total national debt has skyrocketed by more than $7 trillion during Trumps tenure.
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Infrastructure Inflation And Energy
Within days of taking office, Trump signed presidential memoranda to revive both the Keystone XL and Dakota Access oil pipelines although Trump touted the projects as job-creating measures, the proposed projects were projected to have only a tiny impact on the U.S. economy.
Upending The Trade Debate
President Donald Trumps approach to trade weakened key alliances, destroyed jobs and damaged the U.S. economy. It was as if he had used a sledgehammer for heart surgery. But Trump also changed the debate about nonmarket behavior like state subsidies and that was long overdue.
Advanced economies have experienced massive surges in imports from low-wage countries in the past half-century. This is partly a natural result of nations integrating into the global economy under the relative peace maintained by American military might. Export-led growth helped eradicate poverty. But U.S. manufacturers became an open target, some argue, with cheap rival imports overwhelming aging marquee American industries.
Developing nations like China, India and Indonesia created a latecomers quandary for advanced economies. They entered the global trading system after the United States and its allies drastically lowered tariffs on manufactured goods for all members of the General Agreement on Tariffs and Trade and its successor, the World Trade Organization. This left rich countries with little leverage to entice newer members to let go of the production subsidies they still view as key to their miraculous rise from poverty.
No one has had a good solution. Some allies quietly let the problem slide. Trumps trade war made that impossible.
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What Has Trump Done For The Economy
Trump has repeated many times that he has supervised “the greatest economy” ever, according to The Los Angeles Times.
However, the Times reports that the economy has performed roughly on the same level it performed for Barack Obama during the last three years of his tenure.
The economy added 6.6 million jobs in Trumps first three years, compared to 8.1million in the last three years under Obama, according to the newspaper.
The country’s unemployment rate under Trump fell to an impressive 3.5 percent before the devastating coronavirus pandemic struck.
That’s the lowest mark in 50 years.
In April 2020 it was close to 15 percent but has steadily fallen, and in September stood at 7.9 percent.
Tax Cuts Boosted Wealthy
Tax cuts are another of Trump’s proudest achievements. In 2017, the top individual tax rate was cut from 39.6% to 37% until 2025, while corporate taxes were reduced permanently from 35% to 21%. Prakken said the cuts had helped boost the stock market by 5-7% but had also led to a “significant increase in the US budget deficit with potential negative long-run implications for the US standard of living.”
In a report shortly after the tax package went into effect, the nonpartisan Tax Policy Center wrote that the top 20% of Americans enjoyed more than 60% of Trump’s tax savings. Economists said any boost to consumer spending and business investment was shortlived and that little of the benefit had trickled down to low-income Americans. Despite this, Trump has promised to make the individual tax cuts permanent if reelected and plans to slash payroll taxes.
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A Failure To Prevent Layoffs Of State And Local Workers
In the weeks following the coronavirus outbreak, it became clear to state governments that they would have to increase spending to unanticipated levels. Yet a lack of aid from the federal government forced states and localities, who have much stricter budget requirements than the federal government, to cut payrolls for more than 1 million employees, representing a 5.2 percent drop in the total nonfederal government employment level. Without strong guidelines from the White House, states were forced to fend for themselves, often bidding against one another to provide their frontline health care workers with protective gear. This, coupled with the drop in state and local tax revenue, has led to budget crises across the country that could result in significantly deeper layoffs over the coming months. A recent survey by the National League of Cities illustrates the true scale of this problem, finding that more than 98 percent of cities with populations between 50,000 and 500,000 have reported an anticipated revenue shortfall this year.
Serving And Protecting Our Veterans
Reformed the Department of Veterans Affairs to improve care, choice, and employee accountability.
- Signed and implemented the Forever GI Bill, allowing Veterans to use their benefits to get an education at any point in their lives.
- Eliminated every penny of Federal student loan debt owed by American veterans who are completely and permanently disabled.
- Compared to 2009, 49 percent fewer veterans experienced homelessness nationwide during 2019.
- Signed and implemented the HAVEN Act to ensure that Veterans whove declared bankruptcy dont lose their disability payments.
- Helped hundreds of thousands of military service members make the transition from the military to the civilian workforce, and developed programs to support the employment of military spouses.
- Placed nearly 40,000 homeless veterans into employment through the Homeless Veterans Reintegration Program.
- Placed over 600,000 veterans into employment through American Job Center services.
- Enrolled over 500,000 transitioning service members in over 20,000 Department of Labor employment workshops.
- Signed an executive order to help Veterans transition seamlessly into the United States Merchant Marine.
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President Trump Has Failed The American Economy
President Trumps unwillingness to contain the COVID-19 pandemic constitutes one of the most catastrophic failures of leadership in our nations history. His brazenlies about the virus lethality and spread, shamefulefforts to hide critical information from the American people andslander public health experts, and his reprehensible convenings of his very own superspreaderevents across the country collectively illustrate the degree to which he has abdicated responsibility for our nations safety and security. President Trumps refusal to develop a national strategy to defeat let alone contain the virus has resulted in thousands of avoidabledeaths and the most severe economic crisis in a generation.
The Most Important Thing Biden Can Learn From The Trump Economy
A hot economy with high deficits didnt cause runaway inflation.
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By Neil Irwin
For all the problems that President Trumps disdain of elite expertise has caused over the last four years, his willingness to ignore economic orthodoxy in one crucial area has been vindicated, offering a lesson for the Biden years and beyond.
During Mr. Trumps time in office, it has become clear that the United States economy can surpass what technocrats once thought were its limits: Specifically, the jobless rate can fall lower and government budget deficits can run higher than was once widely believed without setting off an inflationary spiral.
Some leading liberal economists warned that Mr. Trumps deficit-financed tax cuts would create a mere sugar high of a short-lived boost to growth. The Congressional Budget Office forecast that economic benefits of the presidents signature tax law would be partly offset by higher interest rates that would discourage private investment.
And the Federal Reserve in 2017 and 2018 took action to prevent the economy from getting too hot driven by models suggesting that an improving labor market would eventually cause excessive inflation.
These warnings did not come true.
Just maybe, does the success of Trumponomics tell us that weve been doing something wrong for decades?
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Failure: Replacing The Affordable Care Act
The late GOP Sen. John McCains iconic thumbs-down vote denied Trump a full congressional repeal of former President Barack Obamas signature healthcare law.
But Trump did have success in dismantling parts of the law. His tax bill included a rollback of the tax penalty for those who did not enroll in healthcare.
Trump never offered a replacement for the Affordable Care Act. As a candidate Trump promised insurance for everybody and a more immediate replacement to the nearly decade-old ACA. But he didnt deliver on that as president.
Taking Billions Out Of Workers Pockets By Weakening Or Abandoning Regulations That Protect Their Pay
In 2017 the Trump administration hurt workers pay in many ways, including acts to dismantle two key regulations that protect the pay of low- to middle-income workers: it failed to defend a 2016 rule strengthening overtime protections for these workers, and it took steps to gut regulations that protect servers from having their tips taken by their employers. These failures to protect workers pay could cost workers an estimated $7 billion per year.
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A Botched Public Health Response
The Trump administration failed to take the coronavirus outbreak seriously. In late February, while other high-income countries were ramping up testing and developing tracing procedures, President Donald Trump stated that the Coronavirus very much under control. It was during these critical early weeks and months that the United States should have been stockpiling protective gear for frontline workers and making testing widely available. In contrast, South Korea, a country whose first confirmed case of COVID-19 coincided with that of the United States, bought 720,000 masks for employees of businesses considered at risk of exposure to the coronavirus. When asked if the U.S. federal government would supply personal protective equipment to states, President Trump responded that it would not act as a shipping clerk.
Figure 2
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Trump’s Impact On The Us Economy
Georgia Strong | United States Fellow
As American President Donald Trumps first Presidential term comes to a close, his economic efforts can start to be fully evaluated. Broadly, Trumps economic policy was greater employment for blue collar workers, and economic growth of 4 to 6 per cent. One of the first programs implemented by President Trump when he was elected was the corporate tax cut scheme. This move likely stimulated the US economy to some extent as gross domestic product rose to 2.9 per cent for 2018. However, the long term economic benefits are wearing off as business investment has declined for the previous two quarters. By February 2020 President Trump was expected to increase the federal deficit by 74 per cent over 4 years.
To put Trumps debt in context, the US annual budget deficit was expected to approximate 4.6 per cent of GDP for 2020, as calculated in January prior to the global economic downturn. Similarly, President Trumps first three years in office all recorded a deficit exceeding 4 per cent of GDP. The only other time the US has partaken in sustained budget deficits of this magnitude is during World War II. A typical budget deficit averages 1.5 per cent of GDP when the economy exhibits relatively strong growth – as was the case in 2016 to 2019.
Georgia Strong is the United States Fellow for Young Australian’s in International Affairs.
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Coronavirus And Cares Act Impact On Deficit
The CBO forecast in April 2020 that the budget deficit in fiscal year 2020 would be $3.7 trillion , versus the January estimate of $1 trillion . The COVID-19 pandemic in the United States impacted the economy significantly beginning in March 2020, as businesses were shut-down and furloughed or fired personnel. About 20 million persons filed for unemployment insurance in the four weeks ending April 11. It caused the number of unemployed persons to increase significantly, which is expected to reduce tax revenues while increasing automatic stabilizer spending for unemployment insurance and nutritional support. As a result of the adverse economic impact, both state and federal budget deficits will dramatically increase, even before considering any new legislation.
CBO provided a preliminary score for the CARES Act on April 16, 2020, estimating that it would increase federal deficits by about $1.8 trillion over the 2020â2030 period. The estimate includes:
- A $988 billion increase in mandatory outlays
- A $446 billion decrease in revenues and
- A $326 billion increase in discretionary outlays, stemming from emergency supplemental appropriations.
