Trumponomics is no flop
Back in the summer of 1982, about 18 months into the Reagan presidency, the Washington Post wrote an editorial that sneered, “Reaganomics is now a failure for all to see.” Two months later began one of the strongest and longest economic revivals in American history, with growth rates that surged above 7 percent. Whoops! The timing of the Washington Post editorial could hardly have been worse. I framed that old editorial and kept in my office for many years. Reagan used to say joyfully, “I knew our economic plan was working when they stopped calling it Reaganomics.”
I was thinking of that editorial the other day after someone sent me a recent column in the New York Times by the economist Paul Krugman entitled, “Why was Trumponomics a flop?” It is fair to say that Krugman has never been anything but a savage critic of the economic agenda of President Trump, and he has rooted against the economy ever since Election Day 2016. The day after Trump beat Hillary Clinton, the Nobel prize winning economist predicted a stock market collapse, which was slightly off the mark, given that the stock market is up near 50 percent and $10 trillion in wealth has been created since Trump was elected.
But that did not stop the Krugman screed from going viral, as liberals celebrated the news that Trumponomics has crashed and burned. What struck me about the column, and the joyous response to it, is just how divorced it is from the reality that most normal people see and feel every day. We have today the lowest unemployment rate in nearly 50 years, low and stable inflation, the biggest wage gains in a decade, the highest stock market ever, and a record 7.5 million unfilled jobs. Those blue collar jobs in construction and manufacturing that President Obama declared would never come back are up by almost 1.2 million jobs in less than three years.
Recent Commerce Department revisions in income gains during 2017 show 5 percent gains for the middle class, which is significant given that inflation is almost nonexistent outside of education and health care. So is Trumponomics really a flop? Only in the sense that “Gone with the Wind,” “Becoming” by Michelle Obama, and LeBron James can be called flops.
This is not to say that we have an A+ economy. Krugman is right that the trade war with China and other tariffs have subtracted from growth this year. Business investment, which is greatly incentivized under the Trump tax cuts, has been decent but not as strong as we had hoped so far. Federal deficit spending is way too overboard. Still, if Obama had ever produced economic prosperity as we have today, he would have led an entire marching band down Pennsylvania Avenue playing “Ode to Joy.”
Krugman grudgingly admits the obvious that unemployment is lower and growth is higher under Trump than under Obama. But he ascribes the Trump prosperity to high budget deficits and easy money Federal Reserve policy. This is absurd for two reasons. First, government spending and printing money does not cause growth. If it did, Venezuela would be the richest nation on the planet. Second, the budget deficits under Obama were almost twice as high as a share of gross domestic product during his first term than they have been under Trump. Big federal borrowing and “shovel ready” projects should have sent the economy out of this world under Obama. Instead, we got the flimsiest recovery in half a century.
A recent Gallup poll found 70 percent of Americans rating the economy as good or great, roughly double the number during the Obama presidency. The disparagement of the Trump record by Krugman reminds me of the old joke about an eternally joyful fellow who is always full of cheer, and the miserable people grouse, “He thinks he is happy, but he really is not.”
Why the Republicans are so incompetent in trumpeting this blockbuster economy is one of the great modern mysteries of life. Their unwillingness or incapacity to take credit for good times and defend the tax cuts that have helped families only lends credence to the curmudgeonly Krugmans of the world. If Republicans do not change their message soon, Trump may lose to one of the Democratic socialists, and then Americans will know what a real belly flop economy feels like. Finally, about 24 hours after the Krugman piece about Trumponomics flopping was published, the latest jobs report came out with 160,000 more jobs added. Whoops!
Stephen Moore is a distinguished visiting fellow at the Heritage Foundation and an economic consultant with FreedomWorks. He served as an adviser to the 2016 Donald Trump campaign. His latest book with Arthur Laffer is “Trumponomics: Inside the America First Plan to Revive Our Economy.”