President Trump has a fine imagination. He is good at names that catch the media’s attention: Crooked Hillary, Crazy Bernie, Weak Jeb, Lyin’ Ted, Little Marco, Sloppy Steve and Little Rocket Man. And with respect to policies, we have “we’ll build the wall,” “rapist immigrants” and “Mueller’s witch hunt,” to name a few.
His labels resonate with a significant segment of society, particularly those who have deeply felt needs that have gone unmet. Simply stated, labels have a significant impact on what has been described by one scholar as “the unschooled mind of the general public,” said to be comparable to that of a 5-year-old. Republican Sen. Bob Corker’s reference to the White House as a “day care” facility seems on target. While we may delight in the imagination of 5-year-olds, the president’s imagination is reason for concern.
He has recently imagined the “Trump Economy.” By calling it such, he seeks to take credit for welcome economic news. In fact, current economic results are a continuation of the “Obama Economy.” The impact of economic policy changes occurs with a considerable lag. Recovery from a financial crisis, such as that in 2008, is particularly difficult. This lesson was evident from the 1929 financial collapse — full recovery took 15 years. The 2008 crash following the debt-financed Iraq war and bursting housing bubble set the scene as President Obama entered in 2009.
A strong economy is built gradually. Obama’s $800 billion stimulus package and sustained low-interest rates and money supply growth got things rolling. U.S. nonfarm employment rose by 15.7 million from January 2010 to January 2017, an average of 2.2 million per year, an annual increase greater than the 1.8 million increase in Trump’s first year. The unemployment rate dropped from 9.3 percent in 2009 to 4.1 percent by the end of Trump’s first year. GDP growth was negative when Obama took office and was over 2 percent when he left, continuing upward as world economies strengthened in 2017. The good economic news is not a “Trump Economy”; it is the Obama legacy. President Trump did not lay the foundation and he deserves little credit.
To be fair, Trump’s tax “reform” likely contributed to already rising stock prices. Corporate tax rate reductions had wide support among tax experts. And while the stock market rose 25 percent in 2017, it’s useful to remember that this followed the more than doubling (up 125 percent) during the Obama presidency. Short-term benefits to owners of stock portfolios and pension plans are clear, but the “economic bump” from increased investment and repatriated corporate revenues will take time to realize. Benefits to many Americans are yet unseen.
There is much that President Trump can take credit for: increased deficits due to the tax changes; increased inequity as income and wealth are skewed toward the already well-off; a lack of investment in public infrastructure and human capital; withdrawal from international trade and climate agreements; reduction in regulations protecting human health and civil liberties; limits on work force through reduced immigration; the removal of health insurance for millions; using resources to build walls and enhance armaments; and regulatory changes that benefit financial, resource extraction, and other sectors. But we must wait to feel the impact of his policies: right now the “Trump Economy” is in our future.
I, for one, am not optimistic and will be delighted if it turns out as glorious as our president imagines it to be.