We are about at that time in the Trump Presidency where one can begin to discern the impact of his agenda on the nation. We’ve had 17 months of Trumpism now — regulatory reform, immigration restrictionism, big new tax and fiscal strategy, unraveling of the ACA, tariffs and trade disruption — how is it all working out? Let’s take a look at some of the early data:
Deficits and Debt — According to a recent CBO report, Trump’s tax and fiscal policies will add $1.9 trillion to the deficit over the next 11 years. The US will be running $1 trillion annual deficits by 2020, and will now officially be among the most indebted nations in the world no matter how you measure it.
In addition to advancing the very un-conservative notion of spending money one doesn’t have, this new fiscal strategy has brought an era of low interest rates and cheap capital to an end (federal funds rate up 50% from a year ago). Not only will rising interests rates put what is essentially a tax on all consumers and businesses as the cost of simple things like credit card debt, auto and home loans, business loans rise, but it will cost Americans trillions of dollars in increased debt service over time. Our indebtedness also chips away at our sovereignty, as it gives the nations who loan us money — China for example — have a bit more ability to influence our nation’s future course. This explosion of debt makes every American worse off.
Slower Job Growth — While the unemployment rate has dropped under President Trump, the economy is producing fewer jobs than it did in the last few years of Obama’s Presidency. 217,000 jobs were created per month in Obama’s second term. Through May of this year quarter of this year it has been 185,000 under Trump. That is a net difference of 384,000 a year and over 3m over 8 years — no small thing.
As for GDP growth, in Obama’s 2nd term it averaged 2.2% a year. For Trump it was 2.3% in 2017, and 2.2% in q1 this year. No meaningful gains here either.
Declining Wages — The Bureau of Labor Statistics’ June Report found real average wages for non-supervisory workers dropped from May 2017 to May 2018, going from $9.25 per hour to $9.24. While there are many ways to look at this data, there just isn’t any evidence that the Trump Presidency or his tax cut has substantially improved the lot of working people in the US. New June numbers show no change in this downward trend.
Rising Interest Rates and Gas Prices — Trump’s tax bill brought the end of low interest rates to an end, which will, as we discussed, raise the cost of just about everything — car, home and student loans, credit cards, business loans — which will take money out of the pockets of every day people. For many these higher costs will almost certainly wipe out any gains received from the tax cut.
Since early 2017 the price of a gallon of gas at the pump has increased by about 30%, with most of those gains coming in just the last few months. Like rising interest rates, higher gas prices raise the cost of just about everything in American society, and takes money out of the pockets of regular folks. These increased costs are likely to impact how much money Americans can spend on other things like groceries and eating out, summer camps and day care, vacations, car and home purchases, transportation to and from work, which will adversely affect tens of millions of people employed in these sectors. Not only will rising energy costs draw us closer to a recession, they dampen labor mobility, something that will make it harder for companies to hire the workers they need to grow.
Rising Levels of Uninsured, Premium Increases — One of the great policy success stories of the past several generations has been the recent rapid reduction of those without health insurance. Using data from Gallup, the insured rate dropped from 18.0 in late 2013 to just 10.9 at the time of the 2016 election. Estimates are that the ACA covered 25m or so of those gaining insurance in just a few years — a remarkable achievement.
Due to a year of sustained political and regulatory attack on the ACA by the President and his GOP brethren, the uninsured rate snapped back to a rate of 12.2% at the end of 2017, a 12% gain — which translates into 3–4 million people. And as Gallup reports, 2017 was the first year since 2013 no individual state saw their uninsured rate decline. And these increases come at a time when the unemployment rate continued to drop and millions of people found employment. Hard to believe that our President has sought this dispiriting outcome on purpose, as a matter of policy; particularly when he explicitly promised to offer a plan which covered everyone and lowered premiums during his 2016 campaign.
For those remaining in a battered ACA, premiums are going to rise dramatically over the next few years. And just in the last few weeks the Trump Administration came out for eliminating the pre-existing condition ban — something that would impact hundreds of millions of Americans.
Stock Market Made Modest Gains, Now Flat — What is perhaps the most extraordinary economic development of the Trump era, the Dow has gained no ground since Trump’s tax cuts were passed late last year. The Dow closed at 24,978 on December 23rd , the first full day after the tax cuts were signed by the President, and began today at 24,252. That the cocktail of huge corporate and high net worth rate cuts, hundreds of billions of newly repatriated assets and hundreds of billions of stock buy backs haven’t produced gains in the stock market is a shocking development, particularly given that the 2017 market gains were modest by historical standards.
Impact of Restrictionist Immigration Policies, White Nationalism — This one is a bit more subjective than the other areas but the President’s all-out assault on undocumented immigrants, and immigrants more broadly, is making the lives of tens of millions living here in the US far worse than it was. There are 11m undocumented immigrants in the US; 13m green card holders (legal permanent residents); 330,000 holders of a temporary protected status visa who have been told to go home; 30 million of Mexican descent, and over 50m Hispanics overall. You pick the number. Whatever it is there are tens of millions of people living and working in the US today who have either been told to leave by the US government or feel far less welcome in their adopted nation. They are not better off today under Donald Trump.
What makes these policies not just harmful to the workers and families directly affected, they are also very bad for the US economy overall. The US is currently at full employment, and labor shortages are becoming more commonplace across the country. Removing millions of current immigrant workers in the coming years would put pressure on US companies to either 1) replace the assimilated immigrant workers we now have with un-assimilated ones — something very costly and complicated 2) grow jobs in countries outside the US where labor is more abundant. As a matter of economic policy, the President’s immigration strategy is nuts, something the Chamber of Commerce echoed in a recent letter to Congress.
Conclusion — So, are we better off under Trump? Job growth is slower. Wages are down. Rising gas prices and interest rates are eating into the incomes (and very modest tax benefits) of everyday people. The stock market had a good 2017 but is down in 2018. Millions are newly without health insurance, and premiums are rising for millions more. The skyrocketing deficit is endangering the US economy, and leaves us little to invest in infrastructure or to combat a future recession. For tens of millions of immigrants, their lives are clearly much much worse. And the President’s trade and tariff agenda is likely to leave American businesses and workers worse off.
So 17 months in Trump’s Presidency it is not clear things are better, and it a strong case can be made that things are worse. Almost nothing the President promised — rising wages, stronger growth, a balanced budget, universal health care and lower premiums, a tax plan that would cause him to pay higher taxes — has come about. It remains to be seen whether the very modest benefits many Americans are receiving from the President’s tax cut will be seen by voters as a net positive given rising costs, skyrocketing deficits and everything else — this remains a big unknown heading into the fall but many polls now suggest the Republicans are losing this one (and for good reason).
This piece suggests that the battle over competing economic narratives — “economy was good, worse now” vs “economy was bad/okay/carnage and everything is better now” — will be a hotly contested one this summer and fall. Current polls suggest Democrats have work to do to win this fight; but the data also suggests the battle is winnable if waged. No reason given the disappointing performance of this economy, or the strong economic performance of both the Clinton and Obama Presidencies, that the GOP should be leading Democrats on the economy. But you can’t win battles if you don’t fight ’em, and this one should be central to the Democrats’ battle plan this election year.