The economic growth of the last two years under President Donald Trump contrasts sharply with the economic malaise over President Barack Obama’s eight years. Tax reductions and deregulation bring prosperity, while unchecked growth in government invites hardship. It seems that everyone recognizes this turnaround except for one man: Barack Obama.
The former President wants credit for the current President’s boom. At a rally in Ohio he said, “When you hear how great the economy’s doing right now, let’s just remember when this recovery started.” He added that job numbers now are the same as they were in 2015 and 2016 when he was president. Obama forgets those two years were towards the end of his presidency, not the beginning. Since Obama brought up the economy, it’s worth looking at the records of both Presidents from when they entered office.
A good place to start with the Obama economy is the benchmark set by his own team of economic advisers. In 2009, they claimed that the unemployment rate would never exceed 8 percent if their $830 billion stimulus package was passed. Obama did get his stimulus package, but the unemployment rate rose to almost 10 percent. When comparing all modern recoveries, Obama’s lags behind almost all of them in employment and output.
This was followed by additional legislation that did little to build a recovery. In July 2009, the Car Allowance Rebate System began. Nicknamed “Cash for Clunkers,” it was supposed to encourage Americans to trade-in their old cars for new, more fuel-efficient vehicles. Obama and his economic team hoped it would increase auto sales, improve the environment, and create many new jobs. The program cost nearly $3 billion and lasted until August. It is now widely considered to have been a failure.
A report from the Brookings Institution in 2013 found Cash for Clunkers cost $1.4 million for every job it created and was insignificant in lowering carbon emissions. The authors, Ted Gayer and Emily Parker, concluded they would not recommend a revival of the program.
The following year, Obama approved the Dodd-Frank Wall Street Reform and Consumer Protection Act to prevent another financial crisis from happening. In reality, it added a mountain of regulations to the financial industry and didn’t speed up the weakened recovery. Dodd-Frank actually supported large Wall Street firms rather than restrain them.
A study by Peter J. Williamson of the American Enterprise Institute revealed that Dodd-Frank disproportionately hurt small banks. Large banks found it easier to deal with the regulatory adjustments, partly because they have access to capital markets. Small banks do not have such luxuries. Banking credit became more expensive to obtain, leaving entrepreneurs with fewer opportunities.
When Obama’s defenders are confronted with hard data, they often ask how the recovery would’ve looked without stimulus policies. Certainly an economic relief package needed to be passed, but the one Obama provided was the wrong answer. Had it been the late Senator John McCain, or another Republican candidate from the 2008 election, the policy response would’ve been different and the recovery would’ve been stronger.
Trump’s economic program is not identical to McCain’s, but there are similarities. McCain wanted to bring back the economy by enacting tax cuts, but Trump did just that when he signed the Tax Cuts and Jobs Act into law. He has also started to unwind the vast regulatory burden put into place by Obama. The economy is now firing on all cylinders.
Trump and Republicans in Congress can boast because of good news in several reports on the radiant health of the economy. Gross domestic product expanded by 4.2 percent in the second quarter of 2018. Wages and benefits are rising at the fastest point in ten years. The country is now at a point where businesses are complaining they do not have enough workers and need to offer greater incentives to boost hiring. Manufacturing is expanding at its fastest point in fourteen years, according to the Institute for Supply Management. Capital spending was stagnant until the tax cuts, but since then it is at its highest point in seven years. Lastly, consumer confidence is at its highest in eighteen years.
Obama has certainly been reading the news and probably can’t help but be jealous. Usually the worse the recession, the stronger the recovery. That didn’t happen in 2009 because Obama handed out the wrong policy prescription. The economic situation only really began to improve when policies were changed under President Trump.
Expect Obama to continue to take credit for the current economic conditions. His problem is that statistics and data don’t lie. The real economic recovery began on January 20, 2017.
The views expressed in this article are the opinion of the author and do not necessarily reflect those of Lone Conservative staff.