A Wall Street Journal article about President Fucktard Trump. "Disgracing America in the eyes of the free world".

Don’t Give Trump Too Much Credit for the Soaring Economy

Tax cuts and deregulation are juicing GDP, but we’ll pay the price for his presidency in other ways.

By Alan S. Blinder

May 16, 2019

In recent weeks, any number of commentators have taken note of what might be called the “paradox of polling” under President Donald Trump. Specifically, the president gets high marks from the public for his handling of the economy but low approval ratings overall.

That disjunction is unusual. Presidents normally get high approval ratings when the economy does well (think Bill Clinton’s second term) and low approval ratings when it does poorly (think George W. Bush’s second term). Yet in this, as in seemingly everything else, Mr. Trump is abnormal.

The reasons are manifold and simple: He lies about almost everything, defies the law, violates the Constitution, disparages our foreign allies, stokes fear of immigrants, disses every American who is not in his base, carries on embarrassing bromances with murderous dictators like Vladimir Putin and Kim Jong Un, and places an incredible array of crooks and grifters in high positions. I could go on.

One of the few things Mr. Trump doesn’t lie about, however, is the economy. It really is in great shape. Does he deserve credit?

Presidents always get more credit for good economies—and more blame for bad ones—than they deserve. By that standard, it is “fair” for Mr. Trump to bask in the reflected glory of a 3.6% unemployment rate.

In 2016 my colleague Mark Watson and I published a scholarly paper documenting that since 1947 (when quarterly gross domestic product numbers begin) real GDP growth rose every time a Democrat replaced a Republican in the White House and fell every time a Republican replaced a Democrat. No exceptions.

Our paper elicited a lot of interest for at least two reasons. First, it’s surprising that Democrats do so much better than Republicans. Second, it’s surprising that the occupant of the Oval Office appears to matter so much because neither basic macroeconomics nor the Constitution assigns the president much power over the economy. The Federal Reserve wields vastly more.

Mr. Trump now stands a good chance of ending the Democrats’ winning streak. GDP growth in the first nine quarters of the Trump presidency has averaged 2.77%—versus 2.3% over the 16 quarters of Barack Obama’s second term. A growth gap of 47 basis points over nine quarters is neither a revolution nor a revelation, but it’s certainly worth having. Furthermore, the lion’s share of that gap can be accounted for by faster growth in business investment.

Again, does the president deserve the credit? His most important economic policy initiative by far was the tax cut Congress passed in December 2017. It was aimed squarely at business investment, which increased after the cut—but only a little. Specifically, the national accounts show the growth rate of nonresidential fixed investment rising from 6.3% over the four quarters before the tax cut to 7% over the four quarters after. With nonresidential fixed investment amounting to about a seventh of GDP, a 0.7 point acceleration in investment growth translates into a minuscule 0.1 boost in GDP growth. (Note to Trumpsters: That 7% figure for the four quarters of 2018 drops to 6.1% if you include the weak first quarter of 2019.)

What accounts for the rest of Mr. Trump’s 47 basis point advantage in overall GDP growth? Ironically, nearly half is the result of the large acceleration in federal government spending between Mr. Obama’s second term and Mr. Trump’s first nine quarters (from -1.5% to +1.8% at annualized rates).

What about the deregulation that Mr. Trump and his supporters constantly trumpet? There has indeed been a lot of it, and the net effect on GDP is hard to assess. Some of the major deregulatory moves weren’t economic at all—like religious exemptions for employers who don’t want their health plans to cover contraceptive services, and denying Title IX protections to transgender students. Others were clearly aimed at the economy—like weakening the fuel-economy standards for passenger cars, and dropping the fiduciary rule for retirement advisers.

The eye of the beholder no doubt matters here. But to me the total impact on GDP from deregulation looks small. Remember, the acceleration we seek to explain is only 47 basis points, and the tax cut and more federal spending account for most of that.

On balance, Mr. Trump’s economic policies probably boosted GDP growth a bit. But that growth came at the cost of an exploding federal budget deficit, several fateful steps down the road to environmental degradation, and reduced protections for workers, consumers, the poor, and small investors—not to mention defaming the Constitution and disgracing America in the eyes of the free world. The polling paradox is hardly mysterious.

Mr. Blinder is a professor of economics and public affairs at Princeton University and a former vice chairman of the Federal Reserve.

Appeared in the May 17, 2019, print edition.