Washington — Four years ago, there was a lot of dread and chaos.
The death toll was rising as COVID-19 spread. Financial markets were in a panic. Oil prices briefly fell to negative territory. The Federal Reserve cut its benchmark interest rates to address the abrupt recession. The US government embarked on an unprecedented borrowing spree to keep families and companies viable, adding trillions of dollars to the national debt.
However, as Donald Trump recounted that event at a recent rally, the former president oozed pride.
“We had the greatest economy in history,” the Republican told the Wisconsin crowd. “The 30-year mortgage rate was at a record low, the lowest ever recorded … 2.65%, that’s what your mortgage rates were.”
Many Remember Solid Economy Under Trump, But His Record Also Full Of Tax Cut Hype, Debt And Disease
The question of who can best guide the U.S. economy could determine who wins this November’s presidential election. According to an April Gallup poll, Americans are most inclined to say that immigration is the country’s most serious concern, but the economy as a whole and inflation were also on the list.
According to an April poll by The Associated Press-NORC Center for Public Affairs, Trump may have a lead over President Joe Biden on key economic issues. The survey found that Americans were more likely to believe that Trump’s presidency benefitted the country with job creation and lower living costs. Almost six in ten Americans believed Biden’s presidency raised the country’s cost of living.
However, the economic data reveal a much more nuanced reality throughout Trump’s presidency. His tax cuts never produced the expected growth. His budget deficits increased and remained reasonably substantial under Biden. His tariffs and trade agreements never restored all of the lost factory employment.
And then there was the pandemic, which resulted in massive job losses for which Trump bears no responsibility, as well as low inflation, for which Trump takes full credit.
If anything, the economy under Trump’s administration should have lived up to his expectations.
In 2017, Trump told the public that his tax cuts would boost the US economy by “3%,” but he added, “I think it could go to 4, 5, and maybe even 6%, ultimately.”
If the 2020 pandemic is removed, the Bureau of Economic Analysis reports that growth after inflation averaged 2.67% under Trump. With the pandemic-induced recession, the average falls to an anemic 1.45%.
In contrast, growth during then-President Obama’s second term averaged 2.33%. So far under Biden, annual growth has averaged 3.4%.
More government debt
Trump also guaranteed that the people would pay for themselves with his tax cuts due to increased GDP. The cutbacks were broad, yet they disproportionately benefited corporations and those with extreme wealth.
The 2017 tax cuts failed to meet Trump’s promises to reduce the deficit.
According to the Office of Management and Budget, the deficit widened to $779 billion in 2018. The Congressional Budget Office predicted a $563 billion deficit before the tax cuts, implying that borrowing climbed by $216 billion in the first year. 2019, the deficit reached $984 billion, about $300 billion more than the CBO had predicted.
Then the epidemic struck, and with a frenzy of government aid, the ensuing deficit surpassed $3.1 trillion. This borrowing allowed the government to send direct payments to individuals and small businesses during the shutdown, often raising bank accounts and making many people feel better off despite the recession.
Many Remember Solid Economy Under Trump, But His Record Also Full Of Tax Cut Hype, Debt And Disease
Deficits have also been high under Biden, who signed into law a third round of pandemic aid and other efforts to combat climate change, construct infrastructure, and invest in American industry. His budget deficits include $2.8 trillion (2021), $1.38 trillion (2022), and $1.7 trillion (2023).
In a Wednesday study, the CBO calculated that extending elements of Trump’s tax cuts slated to expire after 2025 would add $4.6 trillion to the national debt through 2034.
Low inflation (albeit not always for good reasons)
According to the Bureau of Labor Statistics, inflation was never higher than 2.4% per year under Trump. The annual rate peaked at 8% in 2022 under Biden and is now at 3.4%
During Trump’s presidency, inflation was low due to three factors: the 2008 financial crisis, Federal Reserve initiatives, and the coronavirus epidemic.
Trump took office with low inflation, largely due to the long recovery from the Great Recession, during which financial markets crashed, and millions lost their homes to foreclosure
During Obama’s second term, inflation averaged scarcely more than 1% as the Fed battled to stimulate growth. Nonetheless, the economy was growing without overheating.
However, in the first three years of Trump’s presidency, inflation averaged 2.1%, which was near the Fed’s target. Nonetheless, the Fed began raising its own benchmark rate to keep inflation under the central bank’s 2% objective. Trump repeatedly chastised the Fed for trying to boost growth despite the consequences of rising prices.
Then the pandemic struck
Inflation fell, and the Fed cut rates to keep the economy running during lockdowns.
Many Remember Solid Economy Under Trump, But His Record Also Full Of Tax Cut Hype, Debt And Disease
When Trump hails historically low mortgage rates, he does so because the pandemic has hurt the economy. Similarly, gasoline prices plummeted below $2 per gallon in April 2020 since no one drove due to the pandemic.
The Bureau of Labor Statistics reports that the United States lost 2.7 million jobs during Trump’s administration. If the pandemic months are omitted, he created 6.7 million employment.
In contrast, 15.4 million jobs were created during Biden’s presidency. That’s 5.1 million more jobs than the CBO predicted he’d create before his coronavirus treatment and other initiatives became law, demonstrating how much he strengthened the labor market.
Both politicians have regularly promised to restore factory jobs. Between 2017 and mid-2019, Trump created 461,000 manufacturing jobs. However, during the epidemic, the increases stalled and ultimately turned into layoffs, with the Republican Party reporting a 178,000 job loss.
During Biden’s presidency, the U.S. economy has created 773,000 manufacturing jobs.
SOURCE – (AP)
