Biden should think twice before destroying the Trump economic recovery
Former President Trump handed President Biden one of the greatest gifts any outgoing president can give an incoming one: a growing economy. As the United States emerged from the economic shutdown, President Trump presided over the fastest economic recovery from any crisis in American history. In a few short months, however, Biden’s ruinous policies are not only slowing the robust Trump recovery, but endangering it entirely.
Recent economic data are flashing significant warning signs. The April jobs report showed the unemployment rate has ticked up to 6.1 percent, with just 266,000 jobs added, a far cry from the nearly 1 million jobs predicted. Additionally, 18,000 manufacturing jobs were lost, the Black unemployment rate increased to 9.7 percent, and women had a net loss of jobs. Businesses are unable to fill the record 8.1 million jobs available, in large part because of extended and overly generous enhanced unemployment benefits. The April jobs report could prove to be an aberration because of quirks in the seasonal adjustment and ultimately may be revised, but there is no question that there is a strong demand for labor and an artificial damper on the labor market.
Further, inflation — a hidden, regressive tax — is a clear and present danger and there are indications of weakness in some of the wage and housing data.
Perhaps these worrisome trends will not portend grimmer economic news down the road. But even these unfavorable economic signals were utterly avoidable, if only Biden had chosen to continue his predecessor’s successful pro-growth, pro-worker policies, which delivered a booming economy pre-pandemic and teed up the muscular recovery Biden inherited.
When the pandemic necessitated the economic shutdown, the Trump administration worked around the clock to support American families and businesses by implementing the innovative and effective policies of the CARES Act and other relief legislation. Two rounds of stimulus checks went out to 160 million Americans in record time. The Paycheck Protection Program (PPP) supported over 51 million jobs by delivering 5.2 million loans to small businesses in need, allowing them to keep workers connected to their jobs and their health insurance. The Payroll Support Program (PSP) supported hundreds of thousands of jobs connected to the critical aviation industry. Over $150 billion was distributed to state and local governments to assist with COVID-19-related expenses. The Federal Reserve, with approval from the Treasury Department, stood up 13 unique emergency lending facilities to ensure liquidity for capital markets, businesses and households.
As a result of these and other relief programs, in the four months from May to August 2020, the economy regained more jobs than were regained in nearly five years following the 2008 financial crisis under the Obama-Biden administration. That job growth was an all-time high, smashing the record set at the end of World War II. By November 2020, the unemployment rate predicted to be as high as 17 percent during the height of the pandemic — fell to 6.7 percent, a rate not expected to be achieved until the end of 2021.
In the third quarter of 2020, the economy grew by a breathtaking 33.1 percent at an annual rate, shattering expectations and nearly doubling the record set in 1950. The economy continued to expand at a healthy clip when Biden entered office, with GDP growth of 4.3 percent in Q4 2020 and 6.4 percent in Q1 2021. From April through November 2020, the hardest hit industries, including leisure and hospitality, added nearly 4.9 million jobs, and the retail industry added 1.8 million jobs during that period. In late 2020, retail sales reached a new all-time high, consumer confidence increased, new home sales grew, and manufacturing rebounded.
Thanks to the Trump pro-growth policies of tax cuts, regulatory relief and fairer trade deals, the economy was healthy, strong and growing when the pandemic arrived, which allowed us to better withstand the crisis. When reopening began, those pro-growth policies kicked back in, helping to deliver the roaring recovery bequeathed to Biden.
Now, however, Biden and congressional Democrats appear to be intent on reversing many of those policies as part of a broader statist effort to re-engineer the economy, an ideological project grounded in high taxes, massive government spending, and aggressive wealth redistribution advanced during the Obama-Biden years. Emergency-level spending is justified when there is an actual emergency. Emergency-level spending absent an emergency leads down a dreary and unsustainable economic path.
The Biden-Harris White House appears to be a continuation of those Keynesian failures, which led to sluggish overall growth, job creation, and wage growth; greater income inequality; and jacked-up deficits and suffocating debt. Now that the COVID-19 crisis is largely receding, perhaps Biden and the Democrats continue to sell the appearance of an ongoing emergency in order to justify their destructive policies. Average Americans have always paid the price for this leftist economic engineering, and they will again.
Given the unique circumstances around the reopening, perhaps the negative economic trends will prove to be temporary. But in order for the strong Trump economic recovery to be truly durable, the strong Trump economic policies must remain.
The likelihood of that is infinitesimal, sadly, which means we should brace ourselves for the inevitable — and thoroughly preventable — Biden economic slowdown.
Monica Crowley served as assistant secretary of the Treasury for public affairs from 2019 to 2021. Follow her on Twitter @MonicaCrowley.