It’s Trump’s Economy Now
Liberals have opposed virtually every move President Trump has taken on the economy, which makes it inconvenient for them that economic conditions are so universally positive. It is hard to find a single indicator that isn’t pointed in a bullish direction. That’s why the left is now forced to argue that Mr. Trump’s economic success is really the continuation of a trend that began under President Obama.
Take the new book by former Obama adviser Ben Rhodes, “The World as It Is.” Mr. Rhodes quotes President Obama as saying shortly after Mr. Trump’s victory: “I’ve got the economy set up well for him.” That self-congratulatory line was repeated in the media seemingly 1,000 times after Friday’s blockbuster jobs report.
Is it true? Yes, but not in the way Mr. Obama and the Trump haters think. As advisers during the 2016 campaign, the two of us told Mr. Trump over and over that he could get America back on a path of 3% to 4% annual growth. After seven years of the weakest recovery since the Great Depression, we felt confident that simply turning the policy dials from antibusiness to pro-business would have an enormously stimulative effect. Mr. Trump agreed—and that’s precisely what he has done as president.
Mr. Obama might be justified in taking credit for today’s economy if his successor had adopted and carried on his policies. Instead, Mr. Trump has reversed nearly every Obama rule, edict and law that he can legally overturn. At its core, the Trump economic strategy wasn’t complicated: systematically repeal Mr. Obama’s “accomplishments”—the tax increases, the regulatory blitz on business, the welfare expansions, the war on American fossil fuels, and so on. As a result, the economy would pop like a cork pulled from a shaken champagne bottle.
Mr. Obama does deserve credit for the long and durable recovery. But it was a very shallow one that left much of the country behind. Our estimate of the “growth gap”—the difference between where the economy was in 2016 and where it should have been with a normal recovery—was an accumulated $2 trillion to $3 trillion in annual output. We felt confident Mr. Trump could recapture that lost output.
Don’t forget, too, that liberal economists were convinced the economy would crash and burn if voters picked Mr. Trump. Former Treasury Secretary Larry Summers lamented that “if he were elected, I would expect a protracted recession to begin within 18 months.” A month before the election, the Washington Post ran an editorial with the headline: “A President Trump Could Destroy the World Economy.”
Democratic financier Steve Rattner warned on MSNBC: “If the unlikely event happens and Trump wins, you will see a market crash of historic proportions.” In the wee hours after Election Day, with Mr. Trump the likely victor, Paul Krugman declared: “We are very probably looking at a global recession, with no end in sight.”
The smart set argued that getting economic growth to 3% was virtually impossible. Yet 18 months into Mr. Trump’s tenure, the economy is already nearing that mark, with no recession in sight. It turns out that 3% growth seemed impossible to the left only because Mr. Obama’s Keynesian policy prescriptions failed to do the trick.
It’s a little rich that liberals who warned the economy would melt down under Mr. Trump are now insisting that growth was in the cards all along. If the economy and the stock market had crashed, it’s obvious they’d be sanctimoniously denouncing Trumponomics as a tragic failure.
Liberals’ original explanation for the big boost in 2017 was that Mr. Trump was riding an international growth wave. But now international growth has stalled (Europe is growing at 0.4%). Meanwhile, the U.S. economy has picked up steam, and the latest growth projections for the second quarter are above 4%.
A final reason to dismiss the idea that Mr. Obama deserves credit for the Trump boom is that the economy was decelerating, not accelerating, during 2016. The growth rate for Mr. Obama’s last year in office was an anemic 1.6%. But the economy turned on a dime the day after the election. Employers and investors realized that the Obama era was over, and they knew intuitively that good things were on the way. Consumer confidence, business confidence, and the stock market all soared. In June 2016 only 32% of Americans rated the economy as “good” or “excellent.” Today 62% do.
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