Elections, the Economy, and Trump: Part One

Posted in: Tax and Economics

Writing in a public forum—as I do here at Verdict and on Dorf on Law—is a privilege that I never take for granted. Its joys and rewards are incalculable. There is, however, the occasional downside, including being trolled by Donald Trump-loving readers who think that they are oh so clever and decide to try to “own the libs” by posting some snarky comment or other.

Such antics are tiresome and juvenile, and they are easy enough to ignore. Indeed, I am able to stop reading within a few words, once I realize that the commenter is writing in bad faith. Occasionally, however, there are comments that inadvertently help me to see the wrongness of pro-Trump arguments even more clearly.

One such comment recently landed on the comment board for my column titled “The Foolishness of Overestimating Trump” on Dorf on Law. It was a particularly stark version of the argument that everyone should love Trump because he is purportedly doing such a great job with the economy, a claim that Trump himself makes at every opportunity.

Such clarity presents an opportunity to offer a two-part critique of Trump’s but-the-economy defense. Today, in Part One, I will address the reasons the economy is not, in fact, particularly strong and thus is not grounds to vote for Trump, even for those who vote solely in response to economic developments.

In a future column, Part Two will analyze just how many awful things about Trump one must ignore in order to conclude that the economy—even if it were strong, and even if any strength were Trump’s doing—is reason enough to support his continuing in office.

The Last—and Only—Line of Defense for Trump: He Is Not (at least not obviously) Screwing Up the Economy

Just for fun, I will reproduce in full here the snotty comment that was posted on that Dorf on Law column:

“The ‘problem’ is the half of the country that have been given responsibility and who daily earn recognition and the respect of our employers. We judge people the way we’re judged–by the job they do. By that metric, Trump is more than adequate. In fact, Trump’s more capable than anyone who is offering to replace him.

“Unlike you, in our lives we’re judged not merely by how compliant we are to the browbeating of our more half-witted friends, but by the more demanding standard of objective results. Record employment and economic boom are, objectively speaking, A-W-E-S-O-M-E !!!

“Or, don’t you agree?”

There is nothing unusual here, of course, just the usual run of sneering personal insults (people like me, you see, are “compliant” with low standards and slide by on merely subjective results). Even so, at least the person refrained from using profanity and chose not to call me a “libtard” or some other gem learned in Trump’s world; so that is something, I guess.

But the reason to focus on that comment here is that it distills the economy-over-all-else argument so unabashedly. Similarly, The New York Times recently published a letter to the editors that made the same basic argument:

“President Trump is boorish to be sure, but he definitely has an agenda and woe to those who get in his way. And his agenda is not bad.

“He has reinvigorated the economy, has created hundreds of thousands of manufacturing jobs, is correcting trade imbalances with China, has forced NATO partners to start to carry their part of the load, is establishing opportunity zones in inner cities and has defeated ISIS.

“These are all big things. Is he boorish? Yes. Is he a wheeler-dealer? Yes. Can he be rude and impolitic? Yes. Progressives are enthralled more with having a pleasing personality than making significant gains for the American people. … Sometimes you need a bulldog to cut through the baloney and get things done, Freud and St. Thomas notwithstanding.”

One problem with these shouting, one-dimensional defenses of Trump is the specific errors. For example, the trade gap with China is up under Trump, not down, and he did nothing to make NATO partners do more than they had already agreed to do. More substantively, the claim by the second writer that Trump created “hundreds of thousands of manufacturing jobs” is, at best, old news. The manufacturing sector has been in a “technical recession” for all of 2019, according to the Federal Reserve, with output shrinking rather than expanding and job growth slowing to a crawl.

And the idea that the jobs that were created in manufacturing in 2018 were somehow the result of wise economic stewardship does not hold up to scrutiny, because the temporary strength of the economy last year was caused mostly by the increased federal spending that Democrats insisted upon providing for domestic projects. This was not Trump’s doing at all. Indeed, he criticized it.

But wait, one might say. Did Congress not also approve more defense spending at the same time, which Trump at least supported? Yes, but decades of research have shown that the bang-for-buck connection between spending and jobs is strongest for domestic spending and weakest for defense spending.

Or what about the 2017 tax cut—the one that Trump had virtually no hand in creating but that he claims as his greatest (only) legislative accomplishment? Even liberal economists have sometimes referred to the “sugar high” from that tax bill, which must surely mean that the tax cut at least temporarily caused something good to happen. Right?

Again, the tax cut and the spending increases happened at the same time, and economic research has also shown that tax cuts are less effective than spending increases (even defense spending) at boosting the economy—and regressive tax cuts (those aimed, like the 2017 bill overwhelmingly was, at the richest Americans) are the least effective of all.

So this is not merely a case in which a President tries to take credit for all good things that happen while he is in office. Trump tries to do that, too, of course, but this is more specifically a matter of Trump having done almost literally nothing to create the policies that have had any good effects, and he opposed the most effective thing that has happened while he has been in office. We have a very good idea why these things are happening, and the best that one can say is that Trump was not able to stop them from happening, for whatever combination of reasons including incompetence and inattention.

The Obama Economy Chugs Along—and Trump Thinks That’s Great?

In fact, the only backhanded compliment that one can fairly bestow upon Trump about the economy is that he somehow has not actually tanked the whole thing. To be clear, there are now very strong reasons to think that he has—through his absurd anti-trade policies and his general volatility—actually set the next recession in motion. Like most economists, I am truly worried about that possibility; but for the purposes of this column, I will proceed as if the economy is not about to fall off a cliff.

Even so, the supposedly strong Trump economy is not actually impressive at all. Yes, the headline unemployment numbers continue to sit at very low levels, which is better than the alternative. As many analysts have been saying for years now, however, there is simply no perceptible effect of Trump’s presidency on the economic trends that he inherited from Barack Obama.

A recent Washington Post column, for example, summarizes “The Trump vs. Obama economy — in 15 charts.” In chart after chart, what we see is either that things have gotten worse under Trump (for example, rising numbers of people without health insurance) or that the trends under Trump have simply continued on the paths that they were following from the bottom of the Great Recession through the end of Obama’s presidency. Indeed, for most of the relevant economic statistics that have not (yet) turned south, one commentator noted that it is impossible to see (if one covers up the years on the horizontal axis) where Obama’s presidency ended and where Trump’s began.

Now, even though Obama was a much better President than Trump or any of their recent predecessors, his economic record (which Trump is at most merely extending, as noted above) was not great. Correction: Obama did preside over the economy when it seemed very possible—even likely—that we would tip into a full-blown depression. Steering us out of that tailspin was an enormous accomplishment, especially given that he faced unflinching opposition from Republicans every inch of the way.

And unlike Trump, Obama was actually involved in formulating policy. In the face of a possible catastrophe of historic proportions, he delivered for the American people (and the world). Presidents do not deserve most of the credit that they receive for good economic times, but Obama’s actions in 2009 were the foundation upon which all of the subsequent not-bad news was built.

That is a huge thing, but it must also be said that Obama backed off too soon and thereafter allowed the economy to chug along too slowly. His “pivot” to fiscal austerity in 2010 was foolish in the extreme, and it is amazing that the economy made as much subsequent progress as it did.

The best that one can say about the former President on economic matters, then, is that he saved the world but then sat on his laurels and allowed economic under-performance to become the new normal. It is thus silly for Trump and his cultists to say that, because the economy now is actually not quite as strong as it was under Obama, everything is A-W-E-S-O-M-E. There was and is no boom.

The Reality Underneath the Headlines: Most People Are Not Doing Well Economically

The more fundamental problem with the claim that the economy is in a boom is that the somewhat good aggregate numbers hide the genuine damage that is being inflicted on most people by this economy. As I noted above, for example, the gains under Obama in providing health care coverage for more people—gains that nonetheless left tens of millions of people uninsured—have actually turned back in the other direction under Trump.

Interestingly, the troll who wrote the comment that I reprinted above appears to explain this by saying that his half of the country (actually only about forty percent, but why quibble?) “have been given responsibility and … daily earn recognition and the respect of our employers.” The statement is too incoherent to be taken seriously, but it appears to be a claim that people who do not receive health care or other benefits from their bosses do not deserve them—because, I guess, their employer does not respect his employees?

No matter the excuse, the fact is that such people are not experiencing a great economy. Forty percent of Americans—indeed, one-third even of those who still count as middle class—are one $400 unexpected bill away from a personal financial disaster.

Income is again growing on the same slow path that it has been crawling along for over a generation. Retirement savings are a distant dream for most Americans. Young people are not able to start their lives, in part because even those who are able to make the still-very-financially-wise decision to go to college come out with so much debt that they must put everything on hold for years. People who do have jobs often need more than one job simply to run in place. (They are not driving for Lyft for the career advancement opportunities.)

To which the Trump people respond: “But the unemployment rate is low!” And, I guess: “If things aren’t good for you, it’s your own damn fault, losers!!” Their hero operates in a fact-free and logic-starved universe, and they follow his lead.

For the rest of us, the sad reality is that the economy could and should have been doing better for all of us for the last forty years, but even many Democrats (especially Bill Clinton and his crowd) tragically went along with Republicans’ anti-worker agenda and delivered the unbalanced economy that we now see.

If Trump and his supporters are truly counting on the “great economy” to help him with voters in 2020, they are in for a big surprise. And as I noted above, even the illusory story of a strong economy could come crashing down on our heads all too soon.

Even without that, however, we need to remember that the economy is not working for most of us. Running on the supposed strength of the economy is like arguing that a not-quite-bankrupt casino is evidence of a keen business mind. But, of course, Trump cannot claim even that level of non-failure.

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