It’s pretty cringeworthy watching Barack Obama attempt to claim credit for economic growth under President Trump. Granted, one can understand why Obama feels compelled to argue this case — if President Trump sticks to pro-growth policies, Obama’s administration will stand out in history for just how remarkably dreadful his economic agenda was. I don’t think Obama wants to be remembered as the post-2000’s Jimmy Carter, so he’s getting an early start on rewriting his own history.
If you or a loved one has been diagnosed with “Obama-Economy-Delusion-Disorder” (OEDD), I offer this prescription of two red pills:
1) If the economy was “booming” (as NBC News put it) during Obama’s final months in office, Hillary Clinton would have won handily.
2) The economic growth taking place under President Trump comes in spite of — not because of — Obama’s policies. The more President Trump dismantles Obama’s legacy, the more our economy will grow.
Investor’s Business Daily offers a good recap on where things stood before Trump took office:
For eight years, President Obama presided over the worst economic recovery in modern times. For six years, he blamed Republicans in Congress for thwarting his spending agenda and hampering growth. In his last two years in office, he claimed that 2% growth was the best we could hope for. And in his last year in office, while the economy was again stalling out, Obama claimed that Trump’s tax cuts and deregulation would only make things worse.
This week, White House Council of Economic Advisers Chairman Kevin Hassett wisely set the record straight. At a briefing on Monday, he noted that just about every important economic indicator showed the economy was stalling out in Obama’s last year.
Hassett explained that small business optimism had been on the decline before the November 2016 election. The percentage of businesses saying it’s a good time to expand was, too. Business investment was stagnant. All those turned upward starting in 2017. Applications for new businesses are now well above the trend over Obama’s entire second term, Hassett noted. And blue-collar jobs are growing faster than any time since the Reagan administration.
There’s more. The rate of GDP growth was decelerating in Obama’s last year. It went from 2.3% in Q2, to 1.9% in Q3 to 1.8% in Q4 of 2016. Under Trump, GDP growth has averaged 2.9%. It was 4.2% last quarter and might be higher in the current one.
Defending Trump’s economic record vis-à-vis Obama feels hardly necessary when every recent mainstream poll shows Americans approve of Trump’s economic policies (sometimes by a double digit margin).
But in my view, more important than acknowledging Trump’s policies are more pro-growth than Obama’s is realizing how Obama’s legacy is still haunting the Trump administration.
The U.S. economy is still held back by Dodd-Frank’s draconian regulations which strangled the community banking sector; a Consumer Financial Protection Bureau that hurts the consumers it purports to help (albeit less so under Director Mulvaney’s watch); Obamacare’s restrictions on choice and freedom in the health care market (Trump’s expansion of short term limited duration plans will give consumers more affordable options starting next year); and numerous Obama tax hikes including a 3.8 percent surtax on investment income and a top income tax rate (37 percent) that, even with Trump’s tax cuts, remains higher than before Obama took office (Bush had lowered the top rate to 35 percent).
To be fair, not every policy to come out of the Trump administration has been pro-growth in my view, and I share the concerns of many on trade and immigration. But when you look at the economic picture as a whole, Trump v. Obama is an apples and oranges comparison. Barack Obama was unable to achieve the post-World War II average annual economic growth rate during his entire time in office. Now in his second year in office, President Trump stands to get us back on track. This comes in spite of Obama’s policies, not because of them.
Photo credit: Daniel Borman via Flickr, CC BY 2.0