Trump’s pre-pandemic record
Trump’s record offered little legitimate grounds for boasting before the pandemic. The persistent growth in output and decline in the unemployment rate during his first three years extended trends in the recovery from the Great Recession that he inherited from President Barack Obama.
Growth accelerated in early 2018 following Trump’s sole major legislative achievement, the tax cuts he and Congressional Republicans enacted. But that didn’t last long with the economy already near full employment, and the budget deficit swelled. A temporary surge in investment resulted mainly from higher energy prices.
“It provided no long-term benefit,” wrote Mark Zandi, chief economist of Moody’s Analytics The counter-productive tariff wars Trump initiated quickly offset any short-term benefit from the tax-cuts and the administration’s deregulation push. That’s why Trump, to avoid further damaging the economy in his re-election year, called a truce with China in January without obtaining the structural reforms he had demanded from Beijing. Trump earlier threw away leverage by abandoning the Trans-Pacific Partnership with allies that the Obama administration had negotiated. (The NAFTA re-structuring was a sham and if Trump would have won re-election he would have ended the tariff War and declared victory!)
By the way, because of the insipid, misdirected, politically-inspired Tariff War, direct farm aid has climbed each year of Trump’s presidency, from $11.5 billion in 2017 to more than $32 billion this year — an all-time high, with potentially far more funding still to come in 2020, amounting to about two-thirds of the cost of the entire Department of Health and Human Services. Trump’s “very serious policy mistakes,” Zandi said, were his attacks on international and domestic institutions. They include “actively trying to undermine” the Fed’s independence. Financial markets vs. the real world. (Pressuring to low interest rates without a recession or the need for a recovery.
Trump can accurately point to above-average financial market gains. Through November the S&P 500 had risen by an average of 14.34% per year during his term, slightly more than the 12.43% under Obama. (a little inaccurate because, Obama faced five months of the Bush 43 Great Recession when the DJIA went from 8200 to 6600, and then rebounded to almost 20,000 at the end of his second term – a tremendous rebound!)
But those gains have largely been driven by rock-bottom interest rates, which drive investors into stocks in search of higher returns. And the benefits of those gains accrue largely to the most affluent Americans who own most of the stocks. (Also on the subject of jobs, even with the economy on steroids, Trump created 19% less jobs in his first three years than Obama in his last three!)
The President can also cite a higher-than-average 3.32% annual gain in real per capita disposable income. But that average conceals the extent of those gains that flowed to the affluent, who benefited disproportionately from his tax cuts.
As a candidate in 2016, Trump championed the beleaguered blue-collar workers he called “the forgotten Americans.” His policies have not closed the gap between them and economic elites. (also, every recovery from recession, since WWII was started by domestic home sales, hiring countless domestic, blue collar workers. The Derivative Bust, brought on the Great Recession which was caused by a glut of 1,000,000 homes, either abandoned or with under- water mortgages.)
Through the third quarter of 2020, Mark Zandi of Moddy’s, says, the least wealthy 50% of Americans own just 1.9% of the nation’s net worth, while the top 1% own 30.5%. The surging pandemic promises make that disparity worse before Trump leaves office. (the last 15 months before the 3rd quarter of 2019 and before the Pandemic, the GDP grew at less than 2%.)
When the Labor Department issues the final monthly jobs report of his presidency in early January, Zandi expects it to show a renewed decline in employment. In the first quarter of 2021, as Trump yields power to Biden, the Wall Street firm JPMorgan predicts that economic output will shrink. (Job losses, including the 6.6 million created in the first three years, now lost, will approach or exceed 12 million. (That is the only time in the last 12 presidencies that jobs were lost since Hoover!)
Where’s the Money?
In 2019, the Federal Reserve published its 40 years (since 1980) evaluation of Asset Allocation. In those 40 years, $21 trillion went to the 1% and $900 billion was lost by the bottom 50%! If one added $4 trillion that was also transferred to the next 3-4% of the top earners, the total transference would be about $25 trillion. As anyone can see, $25 trillion is a lot of money! It basically reflects the Republican incurred deficits (Recessions and recoveries) since the end of Bill Clinton’s 2nd term, when the National Debt stood at $5 trillion. It is now about $30 trillion.
The top bracket from John Kennedy to Ronald Reagan was 70%. All of these billions earned over the past 40 years were taxed at a lot less. From Reagan’s 28% for the top bracket through Donald Trump’s 37%, the average could be around 35%. Let us not forget the three disastrous tax cuts from Reagan to Bush 43, to Trump.
Therefore, in the most simplistic fashion, if the government had taxed, over the past 40 years, at the Kennedy Tax Rate, the revenues would have been $17.5 trillion. But, since those $25 trillion were taxed at about half the rate, the revenues dropped to $8.75 trillion. If we divided that difference by 40 years, we would come up with a differential of $220 billion per year. That works out to $2200 for 100 million families. If that $2200 had been put in a tax deferred annuity for 40 years, at the average rate of 5%, those families would have had $256,000. But, if that money had been spent each year on infrastructure, school construction, affordable housing, healthcare and better jobs, we would not be in horrible position that we are in today. We would have had more tax revenues and less debt.
June 5th, 2022
The last time I looked unemployment was at 3.6% and heading downward, On December 1, 2017 it was 4.1% after 80 straight months of recovery. In 2017, there were 2 million jobs created, so far, in 2021, after 11 months the total is 5.1 million. Let us remember in 2017, there was no COVID and a big, expensive tax cut, which would inflate the National Debt $3 trillion before the Pandemic.
According to the Bureau of Labor Statistics, the country’s unemployment rate dropped to 3.5% in fall 2019 — the lowest rate in about 50 years, since December 1969.
No evidence showed Trump or his administrations fiscal or regulatory policies caused the 50-year low. Rather, the unemployment rate was steadily declining as part of the country’s overall recovery from the Great Recession before he took office.
The American economy expanded an annualized 6.9% on quarter in Q4 2021, much higher than 2.3% in Q3 and well above forecasts of 5.5%. It is the strongest GDP growth in five quarters with the biggest upward contribution coming from private inventories (4.9 percentage points), namely motor vehicle dealers as companies had been drawing down stocks since the beginning of 2021. Personal consumption increased 3.3%, pushed higher by a 4.7% surge in services spending, namely health care, recreation, and transportation. Fixed investment rebounded by 1.3%, led by intellectual property products that was partly offset by a decrease in structures. Residential investment however, continued to decline and was down 0.8%. Meanwhile, net trade made no contribution to growth as exports jumped 24.5% led by consumer goods, industrial supplies, foods, and travel; and imports went up 17.7%. Considering full 2021, the economy advanced 5.7%, the most since 1984. Under Trump, never broke 3% in the first three years, until it plummeted 36% from January to July 2020! The Trump Economic Miracle.
There was no Trump Economic Miracle! Just the greatest loss of jobs in 4 years since Hoover, record deficits and the rich getting richer as the billionaire class exploded.