Trump’s Economy

President Trump is not running a re-election campaign based mostly on policy. He has released no agenda for a second term, and the Republican Party did not publish a new platform at its convention.  But when Trump tells voters why he deserves to win re-election, he tends to focus on the economy. He created a prosperous economy, he says, and will do so again — better than Joe Biden would — once the coronavirus passes. I want to devote today’s newsletter to explaining the Trump economy, through four key points:

1. The economy was strong before the virus hit. Trump inherited a growing economy, and it kept growing on his watch. It accelerated a bit in his first two years in office, before slowing down again in 2019.

2. Perhaps the best news: Wages were rising, even for lower-income workers. After more than a decade of economic growth, the labor market had become tight enough that employers were increasing pay more quickly than inflation was rising. The trend began under President Barack Obama and continued under Trump.

3. Trump deserves some credit. Josh Barro of New York magazine has argued that Trump’s overall economic record is problematic, partly because his tax cuts were so skewed to the rich — but also that Trump got some big decisions right. Most important, he appointed a Federal Reserve chairman, Jerome Powell, who focused on growth (rather than wrongly thinking inflation was a threat) and kept interest rates low.

4. But Trump also deserves some blame — including for the virus and the recession it caused. Trump’s economic policy geared almost completely toward lifting growth in the short term, while largely ignoring long-term dangers. He increased the deficit, mostly to give wealthy households big tax cuts. He scrapped environment regulations, which increases the likelihood of costly climate destruction. And he hollowed out parts of the government, including its ability to respond to a pandemic.  (One year ago yesterday, Biden tweeted: “We are not prepared for a pandemic. Trump has rolled back progress President Obama and I made to strengthen global health security.”)

The bottom line: Much of the economy’s performance is beyond the control of a president. Trump had the good luck to take office with a far stronger economy than either of his predecessors — Obama and George W. Bush — enjoyed. Later, of course, Trump had the bad luck to have a global pandemic arrive during his re-election campaign.  He has tried to claim full credit for his good luck and deflect all blame for the bad news. While that’s not the fairest way to evaluate the Trump economy, that is the world that exists in the head of Donald Trump. I’m responsible for the good and the bad is fake news.  Ultimately, he deserves solid marks for its performance during his first three years — and much worse marks for his long-term economic legacy.