Froma Harrop: Whom do we thank for today’s strong economy?
A president deserves partial credit for a strong economy. The current economic numbers are good, so to the extent that gratitude is due, let us offer it. Thank you, President Obama.
The economic gauges have been improving steadily for the eight years of the current recovery. Barack Obama was president for seven of them. As the first year of the Donald Trump presidency draws to a close, the economy’s growth has continued — but it has not accelerated in a meaningful way.
In the world as presented by the tweetmaster himself, Trump has already delivered on the economy, and the only direction from here on is up, up, up. Savvy investors, however, are asking, “When do we get out?”
Though the U.S. stock indexes have been hitting highs, stock markets around the world have been doing as well as ours, some better. The economies of Japan and Germany are performing at higher levels (a reason the dollar has been falling against the yen and euro).
The latest unemployment rate, 4.1 percent, is definitely positive. But Obama left the White House with a still-strong unemployment rate of 4.7 percent. That was down from a high of 10.2 percent in 2009.
Candidate Trump dismissed Obama’s falling unemployment rates as “phony.” Trump kept citing the labor participation rate — the percentage of American adults working or actively seeking jobs — which he said was low. Thing is, that number factors in not only people who’ve given up looking for work but retirees, whose ranks are growing.
In any case, the labor participation rate when Obama left office was 62.7 percent. After almost a year of Trump in office, the labor participation rate is … 62.7 percent.
As for America’s working stiffs, Trump’s contribution to their economic well-being is likely to be zilch — or, actually, less than zilch.
Wages are inching up under Trump, but they were inching up under Obama. Workers may be asking why that is, with the unemployment rate so low. The reasons are complex. The more pressing question is: What will the Republican tax package do for them?
Trump keeps tweeting that slashing corporate tax rates will enable companies to use their soaring profits to build, hire and give workers raises. But profits have been soaring for years, and little of the wealth has trickled down to workers. It’s been kept by the executives and investors.
Nothing in the tax bills would change that. What they would do, however, is raise taxes on many working- and middle-class folk to cover huge tax cuts for the richest. Amazing but true, the legislation would tax wages earned by the sweat of one’s brow at a higher rate than the income earned by the proprietor.
Trump and his Republican allies are taking it out of the workers’ hides in other ways, as well. They are creating deficits that are already being used as excuses to go after Medicare and Social Security. And they’re dismantling the Affordable Care Act piece by piece.
Obama inherited a smoking economic ruin. Tax cuts paired with sloppy deregulation had set off monster deficits and fueled a Wall Street orgy mired in recklessness and fraud. Trump and his Republican allies are doing a repeat performance.
There’s long been a need for tax reform, including lower corporate rates. The new version, however, is little more than a money grab by Trump personally and the Republican donor class.
When things go south, Trump will tweet that things are going north. His 30 percent will believe him — or say they do. Imagine how worse it would be had Obama not led us from the abyss and left an orderly economy on the mend.