How to Debunk Trump’s False Claims About the Economy
How to Debunk Trump’s False Claims About the Economy
Donald Trump delivered false claims at the World Economic Forum, illustrating that he, after presenting himself as a populist but governing as a plutocrat, is running a scam.
Just hours before Donald Trump’s impeachment trial got going in earnest on Tuesday, he spoke at the annual World Economic Forum, in Davos, Switzerland, and boasted about the state of the U.S. economy. The speech was obviously an effort to change the subject from impeachment, but it also prefigured the two-track electoral strategy that Trump is likely to pursue after the impeachment trial is done. For the members of his base and other ardent Republicans, he will offer the same strongman platform that he offered in 2016: nativism, protectionism, and slashing attacks on the Democrats and the media. For less committed voters, the Trump campaign will serve up a more traditional incumbent message: “Things are going well. Why risk it all by electing my radical opponents?”
The first task of the Democratic candidate, whoever it is, will be to point out the manifest dangers of giving a figure like Trump four more years in office. That shouldn’t be too hard. But the Democrat will also need an economic counter-narrative that directly addresses the points Trump made in Davos. Actually, that isn’t very hard either, but it will involve debunking his claims and pointing out that it is he who has engaged in radical and damaging policies, the costs of which the country will be bearing for decades. Let’s look at some of the points he made:
When I spoke at this forum two years ago, I told you that we had launched the great American comeback. Today, I’m proud to declare that the United States is in the midst of an economic boom the likes of which the world has never seen before.
Even allowing for Trump’s tendency to exaggerate, this is a ridiculous claim. The truth is that he has presided over a modest pickup in G.D.P. growth, but he has signally failed to fulfill his campaign goal of raising the economy’s growth rate to four per cent.
Between the summer of 2009, when the Great Recession ended, and January, 2017, when Trump took office, the economy had been growing at an annual rate of about 2.2 per cent. Since the start of 2017, the growth rate has risen to about 2.6 per cent. But between 1947 and 1973, G.D.P. growth averaged more than four per cent, and, from 1997 through 2000, it was close to 4.5 per cent.
More recently, there were a couple of quarters in 2014, and also a quarter each in 2009 and 2011, when the growth rate was four per cent or higher. Under Trump, the quarterly growth rate hasn’t risen above 3.5 per cent. In the third quarter of last year, the most recent period for which we have data, it was 2.1 per cent.
The average unemployment rate for my administration is the lowest for any U.S. President in recorded history. We started off with a reasonably high rate.
Actually, Trump inherited an unemployment rate that was already low: 4.1 per cent in January, 2017. Since then, the rate has fallen an additional 0.6 percentage points, taking it down to 3.5 per cent, which is the lowest rate since the late sixties. But Trump doesn’t deserve much credit. If you look at a chart of the jobless rate since the start of 2010, it has fallen continuously. If anything, job growth has slowed a little since Trump took office. According to the nonfarm payroll figures from the Labor Department, about a million more jobs were created in the final three years of the Obama Administration than in the first three years of this Administration. That isn’t particularly surprising, given the length of the recovery, but it undercuts Trump’s claims.
This is a blue collar boom. . . . Real median household income is at the highest level ever recorded. The American dream is back, bigger, better and stronger than ever before. No one is benefiting more than America’s middle class.
Here, again, Trump is claiming credit for a trend that pre-dated him. After having fallen for almost a decade, median household income —the income of the household in the very middle of the income distribution—finally started rising again in 2015, under Obama, and the pickup has continued during this Administration. Rather than any policy changes, the buoyant jobs market has been the driving factor. When the unemployment rate is low, workers are hard to find, so employers are forced to offer higher wages and longer hours. That allows middle-class families to earn modestly higher incomes.
Make no mistake, though—the biggest winners during the past three years have been the rich rather than the middle class. As usual, Trump boasted about the stock market, which is hitting new record highs. He didn’t mention that the wealthiest ten per cent of households own more than ninety per cent of all stocks and mutual funds, or that the 2017 tax cut, which he championed, was massively slanted toward corporations and the rich. According to the nonpartisan Tax Policy Center, middle-income households enjoyed a tax cut of about nine hundred and thirty dollars, whereas households in the top one per cent saw a cut of more than fifty-thousand dollars.
We lowered our business tax from the highest in the developed world down to one that’s not only competitive, but one of the lower taxes.
Trump wasn’t lying here. The 2017 tax bill cut the corporate income-tax rate from thirty-five per cent to twenty-one per cent, and it also contained a huge giveaway for the proprietors of “pass-through” businesses, which, rather than pay the corporate income tax, report income via their owners’ individual tax returns. The key point, which Trump failed to mention, is that there is still no sign of the surge in capital spending and wages that the White House claimed the tax cut would generate. Rather than investing in new offices and equipment, many corporations took the money they saved and spent it on stock buybacks—thus boosting the net worth of their C.E.O.s and stockholders. Workers got very little, and future taxpayers got landed with a huge bill. The tax cut was financed by issuing debt , which has risen by about $2.9 trillion since Trump took office.
If you combine all this, what you get is a giant scam—one that some of the C.E.O.s and Wall Street titans assembled in Davos could probably appreciate. After presenting himself as a populist who would confront a “rigged” economic system, Trump has governed as a plutocrat, showering additional riches on his fellow-members of the one per cent and offering nickels and dimes to the masses. He’s still trying to pull the con; during his speech, he used the word “worker” or “workers” fifteen times, and he claimed to have pioneered a “whole new approach centered entirely on the wellbeing of the American worker.” It isn’t difficult to provide the facts and figures to debunk Trump’s claims. What is needed is a Democratic candidate who can pull them all together and get the message across in language that ordinary people can understand. But that is the subject for another column.
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