Forget His Boasts; Growth Is Just Average and Well
Behind Reagan, Clinton, Even Carter
Donald Trump keeps boasting about what a great economy he should
get credited for creating. But his administration’s own reports don’t support
his claims, which also don’t come close to what he promised voters.
His results so far have been, well, just average.
As if it was a stellar achievement, Trump boasted last week that
the economy grew at an annual rate of 3.2% in the first three months of this
year. Big deal. That’s
precisely the average since 1947.
Candidate Trump
boasted many times that he would boost economic growth. In
October 2015, he said: “I actually think we can go higher than 4 percent.
I think you can go to 5 percent or 6 percent.”
So far, the best he has done is 4.2% in the second quarter of
2018.
That figure was achieved by a threat that briefly juiced the
numbers. Trump declared he would impose all sorts of trade tariffs. Smart
importers and exporters took advantage of the delay between the threat and the
effective to bulk up on deals early.
That briefly pumped up economic growth by moving up deals
scheduled for later in the year. The proof? In the next three months, economic
growth fell by almost half to just a 2.2% rate.
Obama’s quarterly economic growth rate beat Trump’s best four
times, George W. Bush five times, Bill Clinton and Ronald Reagan 13 times each.
One-term president Jimmy Carter beat Trump six times and one-termer George H.
W. Bush did it five times.
Carter’s best, by the way, was 16.4% growth, four times Trump’s
best so far.
The tariffs gambit was not the only stimulus Trump used to pump
up his short-term numbers and trick voters not steeped in economic data, fiscal
policy and trade reports.
With solid backing from Republicans in Congress, Trump is
borrowing extra trillions of dollars in our name. That’s a classic type of
economic stimulus.
Republicans traditionally denounced borrow-and-spend as a tax on
our children and grandchildren. A tax cut, like Trump’s, that does not pay for
itself with equal or increased revenue is just a tax increase deferred into the
future – with interest.
Tax revenues this year are down about 10%.
The Trump/radical GOP tax cut that took effect last year mostly
benefits the rich and corporations. That means the cost of the borrowing is an
obligation we all must bear, but the benefits flow mostly to those who need
help the least.
Bigger Deficits
Trump’s last budget is projected to run a deficit almost 1.5
times the size of Obama’s last budget deficit according to the Trump
administration’s own data, known as Historical Table 1.3.
Trump’s average annual budget deficit over four years will be the worst of any president from Carter through George W. Bush.
The average Trump shortfall will be 4.6% of the economy.
Obama’s was about the same as Trump at 5% of the economy, mostly
because of the Great Recession that he inherited. In his second term, Obama’s
budget shortfall was less than 2.5% of the economy.
George W. Bush came in at 3.3%. Clinton’s annual deficit was a
mere 0.1% because he ran surpluses in his second term.
The cost to you of Trump’s borrow-and-spend approach? Instead of
retiring the federal debt in eight years, as Trump told voters he could easily
do because he was “the king of debt,” the federal debt is growing at the rate
of $30 per day for a family of four. That’s almost $11,000 per year for that
family.
Trump’s borrow-and-spend, however, has failed to stimulate
faster jobs creation.
Under Trump, job growth is slower than under Obama. Trump’s
average is 198,000 more jobs per month. That’s good, but far from great.
Obama, during his last six years and a month, averaged 204,000
more jobs each month.
Why not rate Obama based on his full eight years? Because when
he took office jobs were disappearing at the rate of 750,000 a month, clearly
not his fault.
Just Staying
Even
America’s population grew by 19 million people in the eight
years between when Obama and Trump took office. Taking the larger population
into account makes Trump’s job growth figures even less impressive since a
larger population requires more jobs just to stay even.
Trump promised if elected the nation would add 25 million new
jobs in ten years. He’s on track to fall more than a million jobs short of that
goal.
That goal was nothing to brag about, either. Before Trump
started making campaign promises the projections of future job growth were
about what Trump sold as a miracle waiting for him to make it happen.
The reality is that Trump’s economic performance, measured by
his own administration, is merely average.
Given the strong and growing economy he inherited, average is
nothing to boast about. And since attaining average has included tariffs that
raise the price of some imported goods together with massive increases in
federal borrowing the long-term consequences are going to be anything but great
and probably not even average.
That suggests a new slogan for Trump’s 2020 campaign: Make
America Average Again.
