Have you been hearing all of the good news about the Trump economy? Read on as we debunk the myths and conservative talking points.
There is nothing more I look forward to than a rapid-fire political debate, especially one where left and right are pitted against each other. Although the format has obvious downsides, there are benefits to reap for those who are willing to look closely.
Economy is BOOMING. Seems set to have yet another record day!
— Donald J. Trump (@realDonaldTrump) November 12, 2019
The most recent debate which caught my attention featured Kyle Kulinsky and Charlie Kirk at Politicon 2019. Kyle Kulinsky is the host of Secular Talk on YouTube and a co-founder of Justice Democrats (the group that helped elect U.S. Rep. Alexandria Ocasio-Cortez). Charlie Kirk is the president of Turning Point USA, a conservative nonprofit student organization in the U.S., and a frequent speaker on college campuses.
Some people (including myself) are under the impression that Kirk won the debate, based on optics. He spoke the majority of the time and appeared to be in command of the stage. But does the content of what he said merit this verdict? I don’t think so and will attempt to prove that below.
The debate covered a variety of topics. In this article, I will be talking about the Trump economy, which was the focus of the first half of the debate. Here is a video of the full debate. Continue reading below the video for my analysis.
Conservative Talking Points About the Trump Economy
Kirk attempted to convince the audience that the Trump economy is better than the economy the U.S. had under Pres. Barack Obama. This is the most frequent argument Republicans make for Trump’s reelection: Trump can deliver results as opposed to do-nothing all-talk-no-action establishment politicians.
Kirk cited several statistics to support his opinion of the Trump economy, namely:
- Lowest ever Black, Latino, Asian unemployment and Black poverty rates
- Economic growth: In the last 18 months of Obama’s second term, the economy grew at a 1.5% annual rate, Trump doubled that after his first year in office
- Wages & earnings: In the last 23 months of Obama’s presidency hourly wages rose to $1.30 vs $2.30 over 2.5 years under Trump. Middle-class earnings rose $5000 under Trump, compared to $975 under Obama
- Trump made America energy-independent
- Six million people are no longer on food stamps
- Largest middle-class tax cut in history
Economic indicators depend on various factors, some of which are beyond the president’s reach, so it is one thing to say that the Trump economy is doing well, yet another to give him credit for it. Some of the statements above are true but need context. Others are outright false. Let’s examine them one-by-one.
Lowest Black, Latino, Asian unemployment rate and Black poverty rate
Verdict: True, but needs further context
If Trump’s policies and the Trump economy have had a positive effect, we would expect to see faster improvement in the unemployment rate during his presidency. The trend below reveals that this is not the case.
All ethnic groups experienced a sharp decline in unemployment from 2010 onward and there is no significant change in the rate of improvement under Donald Trump. Historical Black poverty rates paint a similar picture.
Economic growth doubled thanks to the Trump economy
Verdict: False, economic growth under Trump is only marginally better than under Obama
GDP growth is a key metric used by the mainstream media to judge economic performance. I don’t think it should be since gains go disproportionately to the wealthy, but let’s roll with it for a moment. Is America growing faster under the Trump economy?
To answer that, Kirk cited the last 18 months of Obama’s presidency. Since Trump has been in office longer than that, there is no reason to restrict the comparison to 18 months only. Let’s look at GDP growth during the entire time Trump has been in office and compare it with the last three years of Obama’s second term.
If we average growth rates over the two three-year periods, we get 2.33% growth under Obama and 2.47% under Trump. This represents an increase of 0.14 percentage points, an improvement that is nowhere near the magnitude Kirk suggested. It is likely a result of Trump’s tax cuts, which I cover in more detail later on.
Wages & earnings: In the last 23 months of Obama’s presidency hourly wages rose to $1.30 vs $2.30 over 2.5 years under Trump. Middle-class earnings rose $5000 under Trump, compared to $975 under Obama
Verdict: False, wages have grown slower under Trump according to official statistics
Again Kirk chose a peculiar period for comparison. The most obvious thing to note is that 23 months is less than 2.5 years. For an “apples to apples” comparison, we need to look at two equal periods. We also need to look at real wages, to take rising prices into account (hint: Trump’s trade war).
Here is a graph showing that growth in real wages was stronger under Obama.
What about that $5000 number? Did middle-class income really go up that much?
This Trump economy talking point is based on median income figures released by Sentier Research, a private firm that calculates incomes using the Current Population Survey. According to The Washington Post, while Sentier’s annual numbers track the official ones over time, the monthly figures may fluctuate significantly. At this point, it is unclear whether the $5000 number is reliable. Using it as evidence of Trump’s economic performance and a robust Trump economy is a reach.
Trump made America energy-independent
Let’s put aside whether total energy-independence is a good thing. As with unemployment and poverty figures, energy-independence under Trump follows a previously established trend.
6 million people are no longer on food stamps thanks to the Trump economy
Verdict: Half-true, needs context
The SNAP program’s annual summary statistics show higher participation in 2015-2016 compared to 2017-2018. But the difference is around 2.7 million. Also, the number of people on food stamps under Trump shows no significant deviation from an earlier trend.
Largest middle-class tax cut in history
Verdict: Not true in the long run
During the discussion of the Trump economy, Kirk brought up Trump’s Tax Cut bill and hailed it the largest middle-class tax cut in history. Let’s examine this claim.
Long-term estimates that take into account the expiration of personal tax cuts suggest that middle-class earners will have gotten a net tax increase at the end of ten years.
This is a crucial piece of evidence. In times of exacerbating income inequality, Trump (and the GOP) decided it would be fair to increase taxes on the middle class. Indirect benefits notwithstanding, nobody can doubt that Trump’s tax cuts were primarily a boon for the rich.
According to a study released by the nonpartisan Congressional Research Service agency, tax cuts delivered 0.3% of the 2.9% GDP growth in 2018. While that is nothing to sneeze at, it is also a long shot away from the promised 4% growth, let alone 6.7% that was required for it to pay for itself. The effect on wages was modest at best, with annual real wage growth in 2018 being generally consistent with the year before.
What about long-term projections? The Congressional Budget Office (CBO), a nonpartisan federal agency, projected a 0.7% average increase in annual GDP growth from 2018 to 2027. The long-term increase in the GDP will deliver benefits to the middle class in the form of job gains and higher wages. However, if history is any indicator, most of the gains will go to the rich. We have to consider the bill’s price tag and a multitude of other costly priorities. For example, healthcare, student debt, and climate change have to be considered, to name a few. One may wonder whether the mild benefits are worth $1.5 trillion. I’ll let you answer that question yourself.
Conclusion: Trump Economy Conservative Talking Points Debunked
So is the Trump economy truly exceptional as the right-wing is eager to claim? Not by a long shot. Has he managed to surpass Obama? Marginally in GDP growth, at an enormous cost. Trump famously promised his supporters that they will get tired of winning. The middle class is not even close, but the rich just might be.
Featured image via Wikimedia Commons