Tags: Donald Trump | gop | republicans | democrats | economy

GOP, Dems Live in Different Economies

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Friday, 07 February 2020 10:22 AM Current | Bio | Archive

Republicans and Democrats don't just have different political beliefs and agendas these days. They are living in different economies. In his State of the Union address, President Donald Trump maintained that he had "reversed the failed economic policies of the previous administration" and thus "launched the great American comeback."

Responding for the Democrats, Michigan Gov. Gretchen Whitmer described a bleak economy that is working only for the wealthy. These stories are at odds with each other, and both are at odds with reality.

Trump was able to rattle off a string of impressive statistics about the economy's performance. Unemployment rates have dropped, median household income is up, poverty is falling, wealth is rising.

A few of those statistics were misleading — while unemployment among the disabled is at a record low, as he said, the government has only been keeping the statistics for a dozen years — but most of them hold up.

What doesn't hold up is Trump's claim to have reversed years of economic decay. Nearly every positive economic trend he cited began well before he took office. Job growth over the last three years has been slower than under the previous three. The pace of economic .growth picked up only a little between the two periods (and has recently been slowing.)

The number of Americans on food stamps was falling during President Barack Obama’s last years in office, and has kept falling. Increased energy production started in the Obama years, too, which does not mean that the previous president is responsible for it but does mean Trump is wrong to attribute it to his deregulatory moves.

Trump also said that he had undone "the disastrous NAFTA trade deal," and that his new U.S.-Mexico-Canada agreement would create "nearly 100,000 new high-paying American auto jobs." As on previous occasions, he implied that Nafta was responsible for every lost manufacturing job over the last two decades  as though neither automation nor trade with other countries had played any role.

But his new agreement largely replicates NAFTA. The International Trade Commission estimates that the new provisions on automobiles will reduce employment in auto assembly. The International Monetary Fund estimates the deal will reduce U.S. car production and modestly shrink the economy.

Whitmer would have been on solid ground if she had contested Trump's responsibility for the good economic news he mentioned and criticized some of his policies. She could also have noted accurately that the administration has fallen short of delivering the sustained 3% growth it has promised.

Instead, she told us that "American workers are hurting" and that "wages have stagnated, while CEO pay has skyrocketed." Many people have trouble paying their bills, she added.

It's always true, in good economies and bad, that some people are struggling. But it's not true that wages have stagnated, over either the short or the long term, adjusting for the measure of inflation preferred by the Federal Reserve and Congressional Budget Office.

For people in the middle of the income distribution, hourly earnings have risen 25% over the last 30 years — and a little more than that for the bottom fifth of workers. Wage growth under Trump has been consistent with that average pace.

Whether “our economy is the best it has ever been,” as Trump said, depends on how you measure it. National income is higher than ever. On the other hand, national income isn’t growing as fast as it did in the 1990s.

What matters politically is how people feel about the economy. And the signs look bullish for the president. We’re hitting new records for the percentage of Americans who say their financial situation has improved and who are optimistic about further improvement.

Presidents usually get credit for good times and take blame for bad times, whether or not they deserve it. And while Trump didn't take office after "years of economic decay," as he put it in his address to Congress, his tax cuts and regulatory restraint may have helped to extend the boom he inherited.

So there is some rough justice in how the economy is affecting politics. All presidents exaggerate how much good they have done, and Trump has, characteristically, given us an exaggerated version of this exaggeration.

Taking too much credit for a good economy, as Trump does, seems preferable to the current Democratic alternative of pretending it isn’t one.

Ramesh Ponnuru is a Bloomberg View columnist. He is a senior editor of National Review and the author of "The Party of Death: The Democrats, the Media, the Courts, and the Disregard for Human Life." To read more of his reports — Click Here Now.

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Republicans and Democrats don't just have different political beliefs and agendas these days. They are living in different economies. In his
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2020-22-07
Friday, 07 February 2020 10:22 AM
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