Trump and the Republicans have been passing off the recent gains in employment, the modest increase in wages, and the growth in GDP as their handiwork. It wasn’t. To the extent government had anything to do with it, it was for the most part the policies of the Obama administration that made it all happen. He can claim some credit for the recent stock market boomlet, but it’s been rising for nine years now … long before he oozed onto the stage.
Any economist will tell you two things about the presidency and the economy. The first is that presidents really don’t have a great deal of impact on the country’s economic performance. The second is that what effect their policies do have, don’t begin to bite until the second year of their term. That means the economy Trump has been bragging about is largely Obama’s.
Now, one can argue whether capitalism, with its emphasis on growth, and GDP as a measure of growth, is a good thing. I maintain it isn't, and that capitalism is self-limiting. The point here is not to defend capitalism, it’s to unmask Trump, because his favorability ratings have gone up, and much of the reason folks give for supporting him centers on the economy.
Let’s look at the numbers on those things he’s bragging about, starting with jobs.
There were fewer jobs created in Trump’s first year than at any time since 2011
The reality is, job growth has been rising for 7 years now, ever since Obama’s stimulus plan and his rescue of the auto industry in 2009 helped to pull us out of Bush’s Great Recession. In reality, Trump has presided over a slow-down in job creation. But he deserves neither credit nor blame. The fact is, the rate of job increases has been slowing since 2014, and that’s because the nation was nearing what has long been considered full employment in that year (it reached “full employment” in 2015).
GDP growth didn’t change much in 2017 – if anything, it slowed down
Trump and Republicans are also bragging about 2017’s GDP growth, which was about 2.3 per cent on an annualized basis. In 2014, it was about 2.5 percent, and in 2015, it was just under 3 percent. Here again, Trump’s numbers just aren’t that great, and more to the point, they’re pretty much an extension of what was happening in the Obama years.
Wage growth has been growing for nearly four years, and it slowed down in Trump’s first year
Did Trump and the Republicans initiate the increases in wages we’re seeing now? Nope. Starting in late 2012, wages for both supervisory and non-supervisory personnel began to increase, and they’ve been going up ever since. And because the economy is essentially at full employment, wages should continue to increase, and should do so at an accelerating pace, provided the Republicans’ deficit frenzy doesn’t pop the bubble. If wages do increase at a higher rate in the next couple of years, it will be because of the hard work on unemployment that was done long before Trump showed up to take bows.
The stock market boom isn’t an indicator of prosperity
The stock market’s boomlet since Trump’s election has been real, and much of it may be directly attributable to the policies Trump and the Republicans have pushed. But the fact is, the market’s been rising steadily since 2009 and the Trump bump has come with a scary level of volatility.
Besides, the stock market isn’t really an indicator of national prosperity, or economic health. For starters, about half of Americans don’t own any stock, so increases in stock value don’t do much for them. Beyond that, stocks are notoriously subject to short term influences, and their price can be easily manipulated. For example, many companies have been engaging in stock buy-backs – a practice that, until 1982, was illegal because it could be used to manipulate the price of securities. But under Ronnie, “market-uber-alles” Reagan, manipulation wasn’t deemed to be such a bad thing, and the SCC rolled back constraints and companies have been on a buy-back binge ever since. Indeed, in 2016 and 2017, companies spent some $1.5 trillion on buy-backs. Not only do stock buy-backs artificially pump up stock values, they increase the pay of corporate CEOs and other top executives since much of their compensation comes from the pumped-up stock prices they themselves created. That would be like you and I being able to add a zero or two onto our paychecks.
Eviscerating the SCC, lowering taxes on corporations and the ultra-rich, rolling back environmental and other regulations, and increasing the deficit is like putting the economy on steroids, and it’s no surprise that the stock market responded. But the fact is, these measures actually impoverish us over the long term.
Cocaine economics – the hit now isn’t worth the payback later – unless you’re a fat cat
A simple thought experiment will help explain why the Republican’s economic policies feel good while impoverishing everyone but the ultra-rich.
Imagine for a moment that you took all your credit cards and maxed them out. Now take your home equity and borrow the maximum on it. Cash in the kid's college fund, your rainy-day savings, your 401(k) retirement funds. While you're at it, stop paying for your health insurance and the maintenance on your house, your car and your yard. Now take all that money and spend it. Feeling pretty flush? Sure you are. You just pumped tens, maybe hundreds of thousands of dollars into your pocket.
But you aren’t richer. Your living off debt, so in fact, you’re poorer. Oh, and the pittance you’re getting on Trump’s tax cut? It disappears in less than a decade, unless you’re a corporation or able to declare yourself one.
Bottom line: the Republican’s economic policies are a lot like the debt binge described above.
Trump is a flim-flam man – stealing credit and shedding blame
The fact is, Trump’s policies haven’t had time to take effect in the economy, with the possible exception of this year’s stock market performance – and the recent radical swings in that shows that there’s a lot of uncertainty if not outright fear stoking a volatility that is as destructive as it is nerve wracking. Interestingly, this instability showed up just two weeks after Trump’s one-year anniversary – right about when “his” economy kicks in.
Democrats have been accomplices in the corporate give-away
It’s no secret that the effect of policies that the Republicans have been pushing since Reagan is to transfer wealth from the poor and middle class to the very rich, nor that Trump is doubling down on these policies.
What’s not quite as well known is that the dominant force in the Democratic Party – the neoliberal DLC gang – has been party to the looting. Clinton – both Clintons – have been pushing a centrist, corporate-friendly set of policies that has feathered Wall Street’s nest, rolled back regulations on the media and financial interests, cut social welfare programs, and funded the war machine.
But they did at least try to keep their corporate favoritism from sinking the entire economy and that’s why Obama was able to post some good numbers and increase employment and wages.
Trump’s been taking bows for this limited success, but it’s not his. His economy started just a couple of weeks before the stock market suffered its largest numerical drop in history.