During his presidential campaign, Donald Trump made a habit of calling the unemployment rate, much like climate change, a hoax. On at least 19 different occasions, candidate Trump insisted the unemployment numbers were cooked. At a media event in September 2015, for instance, Trump bashed the rate, which stood at 5.3 percent, as “such a phony number,” and “the biggest joke there is in this country.” The actual rate, he claimed, fell somewhere between 18 and 32 percent, maybe even 42 percent. As late as December 2016, Trump was calling the jobs numbers “totally fiction.” But all this was while Barack Obama was president. Once Trump was inaugurated, the numbers became real.
After the first jobs report of 2017 was released, which revealed the unemployment rate was continuing its downward trend set under Obama, reporters asked Sean Spicer if Trump still believed the report was phony. “I talked to the president prior to this,” Spicer said, “and he said to quote him very clearly: 'They may have been phony in the past, but it’s very real now.'” Huh?
Trump’s derision of the unemployment rate—like his derision of the press, intelligence community, justice department, and federal judiciary—was typical cynical political maneuvering; in this case, an attempt to puncture Obama’s record on jobs, which was in fact excellent. During Obama’s presidency, the U.S. saw 75 straight months of job growth, the longest streak in American history. Unemployment under Obama plunged from nearly 10 percent in late 2009 to 4.8 percent when he left office. The stock market, too, did extremely well under Obama, as the Dow Jones nearly tripled from 6,800 when he took office to almost 20,000 when he left. (While GDP didn’t grow particularly well under Obama, it remained sluggish in virtually every developed country in the world, indicating significant global factors at play.)
In addition to Obama’s record-setting jobs streak and tripling of the Dow, consumer confidence and wages were trending upward when he left office. And despite Trump’s relentless boasting about his own “economic revival,” the 1.7 million new jobs added in 2017 were surpassed by Obama in five out of seven years (excluding 2009, which was before Obama’s policies went into effect). All this following the most devastating economic crisis since the Great Depression.
But talk to your typical Trump supporter and they will insist Obama was a disaster for the economy. Ask them about Trump’s first year in office, however, and they will point to the economy as proof he’s done a terrific job. Never mind Trump’s stripping away of environmental protections (toxic waste, methane leaks, and drinking water pollutants are no longer regulated as strictly); his profiting from public office (Mar-A-Lago’s membership fees doubled to $200,000 last year); normalization of lies (The Washington Post counts more than 2,000 Trump falsehoods since he’s taken office); demonization of the press; shrinking of our national parks; intimidation of federal judges; coarsening of our culture; cheating on his wife and allegedly paying hush money to a porn star; failure to fix health care; abandonment of Puerto Rico; or even that the Bulletin of the Atomic Scientists advanced its Doomsday Clock to “two minutes to midnight” largely because of Trump’s belligerence toward North Korea. The economy, say his supporters, is what we should focus on.
The economy is, indeed, robust. But let’s not forget that the economy was robust under the last Republican president, George W. Bush, until it wasn’t. Trump’s tax cuts, as the Guardian recently pointed out, are set to kick in “at the worst possible moment,” with rising interest rates looming and a “danger of the economy overheating.” Indeed, there are signs that a severe economic downturn will occur under Trump—just as one has occurred under every Republican president since Reagan. Conservative economic philosophy over the past 40 years has been remarkably myopic: reflexively cut taxes and slash regulations to give the economy a quick boost, future budgets be damned. As then-vice-president Dick Cheney infamously asserted when justifying budget shortfalls under George W. Bush: “Reagan proved deficits don’t matter.” In fact, Reagan’s reduction of the top income tax rate from 70 percent to 28 percent and his tripling of the national debt have been widely blamed for the Bush I recession.
Along with Trump’s ill-advised tax cuts—that are expected to add more than $1 trillion to the national debt—the president has slashed regulations at a feverish pace. Reagan, Bill Clinton (the “new Democrat” who borrowed many of his financial policies from conservatives), and George W. Bush all notably cut regulations on the financial industry. We saw how that worked out. Slashing regulations, like cutting taxes, typically excites industry and provides a short-term boost to the economy. But less oversight almost invariably leads to risky, reckless behavior. It’s no coincidence that the big financial scandals of recent decades have occurred under Republican administrations. The junk bond scandal of the ’80s, the Enron collapse of 2001, and the 2008 global financial meltdown were all fueled by deregulation, fraud, and lack of transparency.
One major piece of regulation that Trump (with bipartisan support in the Senate) has begun chipping away at is Dodd-Frank, the Wall Street reform bill Obama signed in the wake of the 2008 crisis. By increasing oversight of financial firms, Dodd-Frank helped stabilize our financial system, allowing the stock market to begin its steady climb that has lasted through the present (two of three major market indexes grew more during Obama’s first year than Trump’s). Commercial banks were more profitable than ever in 2016, yet Trump Tweeted that Obama’s regulations “have been devastating.” So he appointed Mick Mulvaney as the head of the Consumer Financial Protection Bureau—“a guy who doesn’t even believe the CFPB. should exist,” one critic charged—and his Treasury Department is trying to make it easier for banks to avoid the “too big to fail” label that would subject them to more oversight. Wall Street penalties have already plummeted under Trump. But even Trump’s own Office of Management and Budget vindicated Obama’s regulatory approach. In its annual report, released last month, the non-partisan OMB found that the benefits of Obama-era regulations far exceeded the costs.
In a 2004 interview with Wolf Blitzer, citizen Donald Trump observed that “the economy does better under the Democrats than the Republicans,” adding, “we’ve had some pretty bad disasters under the Republicans.” He was being perceptive. In a 2014 paper for the National Bureau of Economic Research, Alan Blinder and Mark Watson examined every presidential administration since World War II. They concluded: “The U.S. economy has grown faster—and scored higher on many other macroeconomic metrics—when the president of the United States is a Democrat.” Our current president would do well to heed the words of his younger self. He should embrace the Democratic policies that have helped our economy prosper and eschew the Republican policies that dragged our country into those “pretty bad disasters.”