Trump Running On Economy. Does He Have A Plan To Rebuild It?

Commentary

As police brutality rages in the streets, President Donald Trump can't run on ending "American carnage." He can't run on criminal justice reform. He can't run on winning back America's respect in the world, or having completed his promised wall.

So he's running on the economy. Even though the United States recently notched the worst economic numbers since the Great Depression.

"I built the greatest economy in the World, the best the U.S. has ever had," he tweeted Sunday, echoing similar superlative claims he and his aides have been making for several months. "I am doing it again!"

This statement is so wrong on so many levels that it's hard to know where to start.

First, as one former president might put it, "You didn't build that." Presidents get too much credit when the economy is good and too much blame when the economy is bad; their actions can make a difference on the margin (for example, they could bungle a crisis), but they don't control the business cycle.

Even if the president could control the business cycle, why would Trump want to take credit for this one?

Yes, the economy was doing well before the pandemic tipped us into recession in February. But it was not, by any stretch, "the best the U.S. has ever had" (or "the strongest economy we had ever seen," as White House adviser Kevin Hassett declared last month).

This is a myth that the White House has created and that journalists seem reluctant or unprepared to challenge.

The truth is that before the novel coronavirus hobbled much of the economy, the United States experienced a continuation of pretty much the same solid-but-unspectacular trends in hiring and output growth inherited from Trump's predecessor. Economic growth rates under Trump's pre-pandemic tenure were almost exactly equal to the average pace of growth from President Barack Obama's second term.

This was despite the fact that Trump's economic record benefited from massive fiscal stimulus, through trillions of dollars of unfunded tax cuts and expanded federal spending. And true even though monetary policy was much looser – that is, the Federal Reserve kept interest rates much lower – than Trump's own economic team had forecast would be the case.

Even with these advantages, Trump still underdelivered on his promises of ludicrously high growth. And, again, that was pre-pandemic. Since the pandemic began, things look much worse.

Sure, last Friday, we got some welcome good news: Employers started hiring again, about a month earlier than expected. But while the job-market hole is filling, that hole remains very, very deep.

All net U.S. job gains since 2011 have been wiped out. The unemployment rate remains higher than it was at any point during the Great Recession, and millions of people who have jobs still can't secure enough hours. Once we adjust for such underemployment, people who want to work but have given up looking and a persistent worker misclassification issue that the Bureau of Labor Statistics has struggled to solve, it becomes clear that about a quarter of all Americans who wanted to work last month couldn't find sufficient work.

And while conditions are improving, they're not improving for everyone. Even as overall unemployment ticked down last month for the country as a whole, unemployment for black populations ticked up.

Worse, this administration seems to have no functional plan for expediting the recovery.

So far the White House brain trust's best ideas include (you guessed it) more tax cuts, especially capital gains tax cuts that will help the rich, hobble future presidents' budget plans and do nothing to stimulate the economy today.

That's what they're calling for in front of TV cameras. Behind the scenes, they're trying to pollute the country's way to prosperity.

In recent weeks, the administration has gone on a deregulatory spree, rolling back rules to make it easier for companies to kill wild birds and whales, and pollute the air and waterways. These actions are supposedly a response to current economic challenges, though exactly how killing billions of birds would supercharge growth remains unclear.

Meanwhile, Trump and his fellow Republicans are in no rush to provide the kind of aid that would help the economy: such as giving states and cities the emergency fiscal help they need to prevent more layoffs, or extending the enhanced unemployment benefits scheduled to expire next month. Despite the media narrative that Republicans are rooting for a boom and Democrats for a continued bust – allegedly to improve their respective electoral odds in November – the parties' differing policy agendas suggest otherwise.

The Trump plan, to the extent one exists, appears to be simply declaring the economy great, regardless of reality. Come November, who are Americans more likely to believe: Trump, or their own bank accounts?

Catherine Rampell is a Washington Post columnist. Email her at [email protected].