In NRO, Alexander William Salter argues that President Trump’s economic record vindicates “zombie Reaganism.” I am well-disposed toward the Republican tax reform of 2017, regulatory restraint, and Reaganism. (Less sold on zombies.) But I also think that all of us involved in debates over economic policy are prone to attribute too much importance to it. And I think Salter has fallen prey to this mistake.
His main piece of evidence that zombie Reaganism succeeded is that it “resulted in soaring median household incomes.”
Did it?
There are a variety of ways of measuring real median income. In what follows, I’ve relied on my American Enterprise Institute colleague Scott Winship, who used the Census numbers on median household income, adjusted them for inflation based on Personal Consumption Expenditures, and took account of relevant changes in Census methodology. But I’ve looked at the numbers using a variety of measures — using the Consumer Price Index to measure inflation, for example — and the conclusions remain intact.
He finds that in 2014, median household income fell 1.3 percent compared to 2013. They rose in all subsequent years: in order, by 5.1, 3.4, 2.5, 1.2, and 6.5, this last number being the percentage increase in real median household income from 2018 to 2019.
Those numbers don’t tell you how to interpret them. Here are a several true observations that can be made about them but cut in different directions.
*The last pre-pandemic year, well into Trump’s presidency, had the best result.
*The second best year in the period came well before Trump.
*The average growth rate of Trump’s first three years was higher than that of Obama’s last three, thanks largely to the first and last years in the series.
*The average growth rate of Trump’s first three years was not significantly higher than that of Obama’s last two. (Using Winship’s numbers, the last two Obama years actually saw faster improvement in median income than Trump’s first three.) There was no inflection where the rate of growth jumped until our last data point, for 2018-19.
*Growth slowed for three years in a row for a period straddling both presidencies and including the passage and implementation of tax reform; later it shot upward for one year.
I don’t think these numbers lend themselves to a story in which tax reform or regulatory restraint — or, for that matter, the trade war with China — had strongly positive effects on middle-class incomes.