Economy & Business

It’s Trump’s Boom, Not Obama’s

Justin Mound installs an airbag on the assembly line at GM’s Chevrolet Silverado and GMC Sierra pickup truck plant in Fort Wayne, Ind., July 25, 2018. (John Gress/Reuters)
Tireless Obama loyalists insist that his policies have finally started working.

At first they tried to deny its existence. Then they said it was fool’s gold. Now they want someone else to get the credit for it.

That’s the short history of mainstream-media coverage of the good economic news we’ve had ever since Donald Trump won the November 2016 presidential election. After first being in denial about the obvious fact that the economy has taken off since Trump’s victory and then predicting it would soon collapse, we’ve now gotten to the point where the New York Times has no choice but to fall back on a familiar but unpersuasive argument: It’s really President Barack Obama’s good economy.

That was the conceit of a front-page feature in the Sunday New York Times this past weekend. It argued that the credit for the strong gains in growth and the decline of unemployment really belongs to Obama, since positive trends were already in place when he left office. Just as interestingly, while the Times conceded that the public wasn’t buying these Democratic talking points, it claimed that Trump’s outstanding salesmanship is the main reason the public associated a booming economy with him. Conversely, it asserted that the reason no one gave Obama the economic plaudits he deserved was that the Obama administration was unwilling to boast of its achievements.

While Trump may not be the economic genius that he and his faithful followers think he is, these arguments are bunk.

No one can predict with certainty how long the positive trends will last, but it’s absurd to claim that Democrats were shy about claiming credit for every kernel of good news they could claim during the anemic eight-year recovery from the 2008 financial crisis. The reluctance to give Trump credit for the current boom is also absurd. The financial markets took off the moment he was elected and, despite some corrections, haven’t really looked back. Moreover, the economic optimism that is fueling both growth and the other strong indicators about unemployment and wages is the direct result of two factors that not only were Trump’s responsibility but also were the result of policies that Obama and the Democrats fervently opposed.

Any discussion of presidents and the economies over which they preside must start by conceding that all of Trump’s predecessors have generally been given too much credit for anything good that happened on their watch, and too much blame for anything bad. Although most of the president’s powers have to do with foreign policy, we elect presidents largely on the basis of their economic promises. But even the vast expansion of government power that has taken place in the last century gives a president few tools to effectively manage the economy. The best and the worst we can say about most presidents is that they didn’t get in the way of the private sector’s strong gains or make things worse by unfortunate interventions.

Yet in Trump’s case, the current uptick is more than a matter of fortuitous circumstances or simply his being in the right place at the right time. When the markets began to rise after November 8, 2016, it was largely due to the business sector’s relief at both Obama’s upcoming retirement and the prospect of his being replaced by, to the surprise of most, Trump rather than Hillary Clinton.

This was a surprise to most economic pundits not just because few thought Trump would win but also because most thought Wall Street would share their conviction that the former real-estate mogul was an economic fraud rather than the financial mastermind that he played on reality television.

But while that initial surge was more a matter of faith than anything else, those who put their money on Trump were vindicated.

The chief reason for the optimism that Trump engendered wasn’t so much his advocacy for lower taxes — a promise that was ultimately vindicated by Congress’s passage of a tax-reform bill in December 2017 — as it was his dedication to regulatory reform. As even the Times conceded in a January 1, 2018, article, the enormous burst of business confidence that began in 2017 and carried over into the current year was primarily the result of Trump’s rollback of Obama’s overregulation of business during his eight years in office.

Even when businesses had reason to feel good about the post-2008 recovery, optimism was always limited by the knowledge that Obama’s bureaucracy was dedicated to imposing new regulations throughout the economy. That was especially true for the transportation and energy sectors, where liberal ideology about forcing change to a “green” economy usually overrode every other consideration, especially those concerning growth and jobs.

While not the return to the laissez-faire policies of the 19th century that Democrats claim, Trump’s orders to roll back much of Obama’s big-government overreach have been a tonic for confidence and growth. Businesses can now count on the government to largely stay out of their way at least until 2021, and the result has helped produce the kind of optimism that fuels growth.

While not the return to the laissez-faire policies of the 19th century that Democrats claim, Trump’s orders to roll back much of Obama’s big-government overreach have been a tonic for confidence and growth.

Trump’s credit for the good numbers is accentuated by the fact that Obama and the Democrats bitterly opposed the measures that are most responsible for the upturn. The idea that a boom promoted by deregulation and tax cuts (measures Obama saw as economic poison) should really be credited to Trump’s predecessor is not so much partisan hyperbole as utterly illogical.

It’s possible that the boom will be derailed if, contrary to the boasts of Trump and his supporters that the president will find a way to make his foreign antagonists surrender, his trade wars devastate export and import sectors and set off a general decline.

Yet if Trump will deserve the blame for tariffs, he also should get the credit for what deregulation and lower taxes achieved. And if he does, it won’t be merely a matter of having the salesmanship skills that, as the Times alleges, Obama lacked.

Accepting the idea that Obama stuck to the facts and avoided politicizing the economy requires a considerable degree of amnesia about his presidency. Obama spent his entire first term and much of his second blaming all the economic bad news on George W. Bush. While Obama had inherited a difficult situation, his stewardship of the economy wasn’t so much praised by his media cheering section as it was elevated to heroism. His admirers depicted Obama as the nation’s savior, with the sort of hero worship that Trump backers practice and for which they are now lambasted by their opponents.

As for Trump’s supposedly superb salesmanship, it’s true that the president isn’t bashful about claiming credit. But if he were really expert at seizing credit for good news, Trump wouldn’t spend so much time and energy distracting the public from the news of his economic success. His tweets and statements are a never-ending stream of arguments, complaints, and abuse directed at opponents that make it harder for voters to concentrate on the central fact of a robust economy that is bringing down unemployment and raising wages for his working-class supporters as well as satisfying big business. If the Republicans lose control of Congress this fall, it will be because Trump isn’t as good a salesman as either he or his opponents think he is, and it will disprove James Carville’s rule that elections are always about “the economy, stupid.”

Trump has removed the regulatory shackles that Obama placed on the economy during his unsuccessful attempts to orchestrate a robust recovery. Whether it lasts or will be undermined by other policies remains to be seen. But whatever else happens, the boom belongs to him, not Obama.

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