The President and the Economy

Author: Danielle ,

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  • Danielle
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    Trump inherited a growing economy. 

    If you look at the Federal Reserve Family Finance Report which details American earnings between 2016 and 2019, you will notice the income gap between the richest and poorest has declined for the first time in ages. From other sources you can see that median household net worth and income have also increased. So it's undeniable that we have had a relatively strong economy these last few years pre coronavirus. However considering Trump took office in 2017, the gains detailed in this report were clearly underway prior to Trump taking office.  You can look back even a few years further and see how Trump's administration presided over the same upward trend the economy was already headed on during the Obama years.  

    For virtually each measurement, the trend lines continued almost seamlessly from the second half of Obama’s presidency into the first three years of Trump’s tenure. Average real GDP growth was roughly the same (2.6 percent) for the first 11 quarters under President Trump (ending September 2019) and for the last 11 quarters of the Obama administration. During the last two years of the Obama administration, annual median household income increased $4,800. This is three times more than the $1,400 increase during the first two years of the Trump administration despite a tax cut for the middle class -- which I'll get to in a moment.  

    So while most people acknowledge the president has little to nothing to do with the economy overall, we have data to back up the fact that Trump has not been some mastermind presidential businessman; he did not "turn the economy around" or do anything remarkable. He simply presided over a time of growth that would likely have continued heading in that direction anyway. I do think Trump sparked confidence with investors that led to some bullish gains, but a lot of those gains would have been erased at the first sign of trouble (in this case, Covid-19) as they always are with market ebbs and flows. 

    I also think it's worth noting that Trump has ripped Fed Chairman Jerome Powell a new asshole at every single turn and has done nothing but heap criticism at him while simultaneously taking credit for the booming economy.  


    It's dishonest for the GOP to credit tax cuts for gains during Trump's presidency. 

    The tax cuts not take effect until 2018. By that time, unemployment had already dropped, household incomes had already increased, and millions of new jobs had already been created if you look at the data. There has also been no measured relationship between the size of the tax cut companies received and their subsequent investments as far as I can tell. 

    Furthermore similar gains could have been made years earlier had it not been for an insanely obstructionist Republican Congress. Obama repeatedly tried to get Republicans to sign on to additional spending and tax cuts for the middle and lower class, but the GOP refused every single time. You had Ted Cruz, Rand Paul, Mitch McConnell, et. al insist that higher deficits were philosophically unacceptable and financially ruinous. Even when the Obama admin proposed a moderate stimulus plan in 2016 that would have targeted infrastructure, Republicans would not budge. However under Trump the GOP has presided over the largest two-year deficit in U.S. history outside of a recession with no care in the world. They've exposed themselves (again) as deficit frauds.


    Trump's trade war has been detrimental to the U.S. economy, especially in some states.

    As most people know, protectionism is often bad economic practice but great for politics,  because it can rally enthusiasm from critical Rust Belt swing states that have large manufacturing sectors and have been hit hard by globalization. However a new St. Louis Fed study shows why this logic is misguided. The TLDR is that  the U.S. manufacturing industries that more heavily rely on imported products (and are therefore subjected to import tariffs themselves) include Rust Belt states that specialize in these trade‐exposed industries, such as Michigan and Ohio which import a lot of aluminum and steel for their manufacturing sector. Michigan in particular was affected negatively by Trump's trade war. Estimates say that it has cost several hundred thousand jobs in this key swing state. The Trump administration was also forced to provide billions of dollars in new federal subsidies to farmers. So if we look at the explicitly DIRECT impact the President had on the economy, it would arguably be negative in the short term. 


    With that said - 

    • Everyone still says the economy is the #1 issue in America regarding presidential elections. Should it be?  
    • What should voters be considering when presidential candidates campaign re: economic policy proposals? 




  • Greyparrot
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    --> @Danielle
    Trump's trade war has been detrimental to the U.S. economy, especially in some states.

    Is it possible Trump traded short term revenues and temporary job losses for an incentive to retool the economy creating new lasting Domestic jobs with his sin-tax on foreign product consumers? If so, how is this any different from a tax-funded subsidy aimed at incentivizing long-term local development?

    It's dishonest for the GOP to credit tax cuts for gains during Trump's presidency.

    If it wasn't his tax cuts, then the only other significant stimulus for job creation must have been his deregulation. That would really fly in the face of Keynesian economists saying that government fiscal policies drive the GDP and not the people themselves when left unrestrained.
  • oromagi
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    --> @Danielle
    I generally think the whole of economic thinking/modeling is fucked.  Why would anybody value GDP increases if those increases aren't reflected in personal income gains?  Why should any nation value economic expansion over long term sustainability?  Why should the price of gold be more essential to human prosperity than the well-being and education of our children?  Are we really here on this planet to hoard gold or are we here to improve the prospects of the species?

    Did you follow Moody's election forecast? 


    +2.9% 2030 annual GDP if Dems swept vs.
    +2.6% 2030 annual GDP if Reps kept power

    +7.4 million jobs under BIden admin than Trump admin

    I find it interesting that people who definitely voted for Trump for reasons of personal gain nevertheless anticipated real deficits for the nation as a whole if Trump won.
  • Imabench
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    --> @Danielle
    • Everyone still says the economy is the #1 issue in America regarding presidential elections. Should it be?  
    Considering how hard even middle class voters are getting pinched in terms of financial wellbeing, and how hard people close to the poverty line already have it, economics is and should continue to be the number one issue in presidential elections..... The economy deserves to be the #1 issue, but at the same time we cannot become TOO worried about it. With Covid going on, it feels like damn near everyone is questioning how hard we should fight it not based on how successful the efforts would be on Covid, but instead on how bad the economy would be effected, even though Covid's spread itself is far more damaging long term to economic performance compared to just about any temporary measure imposed to try to restrict Covid. 

    • What should voters be considering when presidential candidates campaign re: economic policy proposals?
    Minimum Wage arguments have languished for so long that individual states themselves have had to pick up the slack and raise it on their own.... Florida voted for Trump pretty clearly yet a vote to raise the minimum wage in the state won by a 61-39 margin, so its not just blue leaning states that are getting on top of that.... Other regulations and taxes on income and businesses also vary state to state rather then wait on the federal government to get its shit together as well. 

    The biggest thing at the national level voters should think about is the trade war with China and reorganization of trade agreements, because that's something that cannot be addressed on state levels. The tariffs on Chinese products is a good idea that has been executed haphazardly and poorly, while on the other hand the reorganization of NAFTA was done pretty successfully. Had Covid not come along Trump probably would have won re-election even with everything else that has gone on during his administration since he had one clear win with NAFTA and was sort of on the right track against China. 

    I personally would gravitate towards any candidate who wants to nuke the tax code and replace it with a linear system that increases tax rate based on income, rather then the tiered system full of holes weve been stuck with for ages. Not a flat tax though because thats dumb as fuck as well as anyone who buys into it.
  • Dr.Franklin
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    --> @Danielle
    the TLDR is that  the U.S. manufacturing industries that more heavily rely on imported products
    and thats the issue? how did we get to this level and how can we reverse it?
  • Greyparrot
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    --> @Dr.Franklin
    What is the opportunity cost of having a large unemployed class due to outsourcing?

    Is it more important regarding the health of a nation for its citizens to contribute to society and have a purpose than ensuring access to a large flatscreen TV?
  • Dr.Franklin
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    --> @Greyparrot
    obviously to contricute
  • Danielle
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    --> @Imabench
    The economy deserves to be the #1 issue

    I understand with some people prioritizing their economic self interest (it would be interesting if someone made the argument that valuing money over human rights is immoral), but what I mean is whether or not it should be the #1 issue when it comes to looking at presidential candidates. There is little to no evidence that a president has a significant impact on the economy overall. To the extent that she does, I was asking which policies are most important to consider. 

    I agree with you re: the minimum wage being more of a state's issue and considering the president's impact on tariffs/negotiating with China.

    I disagree that Covid was a bad thing for Trump. I'm not an expert but gut hunch says Trump could have absolutely used Covid to his political advantage. In times of crisis, people want a leader. All Trump had to do was say "We got this. We're Americans. We can do anything. We can beat this thing, and we're going to have the best numbers in the world. Here's what you got to do: Take the virus seriously. Wear a mask. Wash your hands. Limit gatherings. We are strong. Here's what we know about the vaccine, and here's what we're doing in the mean time." Instead he diminished the severity of the virus (I acknowledge the impact is relatively small, but hundreds of thousands of Americans dying is not insignificant) and allowed conspiracy theorists to run wild. He only knows how to measure himself by the stock market, so out of fear the market would panic if he acknowledged the virus he chose to disregard a lot of people's fears instead. I truly believe had he exercised a more balanced approach and better leadership style, instead of  militant denial and laughing in the face of guidelines that some people in the suburbs or some elderly people would not have been as turned off. A lot of leaders and politicians are able to use crises to gain popularity. Rudy Giuliani is a good example of that. 


    I personally would gravitate towards any candidate who wants to nuke the tax code and replace it with a linear system that increases tax rate based on income
    Only income? No other wealth considerations? I suppose the tax advocacy is another important thing to consider although Congress has to get on board with any proposal. For instance if Bernie were elected President over Biden in 2020, Bernie's plans wouldn't be implemented. That's what I kept trying to tell the Bernie Bros who were having a meltdown during the primaries. The Dems would have actually done a lot worse in other races if Bernie ran so probs not even close to anything he wanted would actually get done. 
  • Danielle
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    --> @Dr.Franklin
    and thats the issue? how did we get to this level and how can we reverse it?

    Well that's the issue regarding the study I tagged. It analyzed the impact of the tariffs. 

    I'm not a fan of tariffs though I do think we should reconsider and renegotiate some trade policy. 
  • Conway
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    --> @Greyparrot
    What is the opportunity cost of having a large unemployed class due to outsourcing?
    I think free trade would be ideal.  However a great deal of countries artificially stimulate certain sectors for matters of national security or cultural perception.  Maybe you are old enough to remember what happened to the agricultural industry in Mexico when it competed directly against subsidized corn in the US.  No doubt, it would be more efficient to consolidate all the small farms, and force the farmers to work somewhere else where their labor can produce additional commodities and services.  Is the product worth the displacement in wealth and property that took place?

  • Conway
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    Trump's trade war has been detrimental to the U.S. economy, especially in some states.
    They wouldn't call it a war if they had not counted the cost.  It's unfortunate that the only man willing to bear the responsibility for this overdue event would be a single term president.  Hopefully the president-elect will turn course in honor of his country, competently double down, and negotiate fair terms.
  • Conway
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    It's dishonest for the GOP to credit tax cuts for gains during Trump's presidency. 
    Normally I would agree with this without a second thought, but you can't criticize the tax policy in isolation of the challenges the country has been facing.
  • Greyparrot
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    --> @Conway
     Is the product worth the displacement in wealth and property that took place?

    It is a valid question, and on a related topic, is having cheaper food provided by illegal labor worth losing the opportunity to have unskilled local labor work on a local farm for a decent wage? What is the opportunity cost of that cheaper food?

  • Dr.Franklin
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    --> @Danielle
    protectionism is good
  • Conway
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    --> @Greyparrot
    Is having cheaper food provided by illegal labor worth losing the opportunity to have unskilled local labor work on a local farm for a decent wage?
    The exploitation of illegal labor is just wrong, and it's sad that people argue on economic grounds.  When you see a politician quoting the one guy saying Americans don't want to work this sort of job, what that translates to in the real world is that Americans don't want to work for this sort of pay.  A young man worth his salt will move anything you want for a living wage.

    I understand locally that any immigrant is welcome to all the hospitality my community has to offer, but it's not appropriate for the president to do anything but discourage people from coming to the US without entitlement to the full benefit of the law.  We need to be looking to a path forward that has a clear cut enforcement policy.  In the primaries, I'd like to see someone who's willing to lead their party to compromise and codify some sort of guarantee to the children smuggled into the United States.  As far as leading the executive branch is concerned it's the president's job to enforce the law, and it's up to congress to change it.  Enforcing every law is the most assured means of letting people know when it's time to go through the proper channels in the legislative branch.  

    More than that, I would like to see people being considerate of the conditions that are leading people to abandon their homeland for the United States.
  • Conway
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    • Everyone still says the economy is the #1 issue in America regarding presidential elections. Should it be?  
    The president is a public servant who's job is to head the executive branch of the federal government, along with the armed forces.

    The next 4 years of their career begin with an oath: "I do solemnly affirm that I will faithfully execute the Office of President of the United States, and will to the best of my Ability, preserve, protect and defend the Constitution of the United States."

    - Disqualifying characteristics

    1.  Respect for the Constitution
    2.  Political independence
    3.  Foreign Relations
    4.  Military Experience
    5.  Economic Approach



  • Danielle
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    --> @Greyparrot
    Is it possible Trump traded short term revenues and temporary job losses for an incentive to retool the economy creating new lasting Domestic jobs with his sin-tax on foreign product consumers? If so, how is this any different from a tax-funded subsidy aimed at incentivizing long-term local development?
    Yes, it's possible. Is there any evidence to support that will occur?  The facts seem to show that tariffs and quotas seldom save jobs for long or preserve the competitiveness in industries that need to be "saved." But I am open to any data you have that suggests this will be the long-term outcome.

     Sin taxes create higher costs for entrepreneurs which limits employment + growth opportunities. A subsidy is aimed at incentivizing development, not stifling it. 

    I think protectionists forget about the impact of "linkage" industries. By raising domestic prices for steel, for example, quota protection undermines the competitiveness of the car and machinery industries which are heavy users of steel.

    A more anecdotal example: I have a friend who runs two businesses. One of them is selling licensed Farberware products which are manufactured in China. He employs multiple people as it pertains to this business: a few sales associates; a few people to work in the warehouse; and a few people to do customer service, accounting and other administrative duties. He is an American employer who relies on Chinese goods to run his companies, so selling products from China creates some well paying American jobs. Just look at Amazon retailers for many more examples of people like my friend. A lot of small business owners won't be able to absorb or pass along the cost of increased imports which will certainly have an impact on blue and white collar American jobs as well.   

    If it wasn't his tax cuts, then the only other significant stimulus for job creation must have been his deregulation. That would really fly in the face of Keynesian economists saying that government fiscal policies drive the GDP and not the people themselves when left unrestrained.

    #1 deregulation and tax cuts are not unique to Trump in general, so I don't know why he's given credit for those "policies" which have been implemented many times before - they are capitalist positions the GOP has been touting for eons, and Trump is more of a populist and protectionist than a free market capitalist. #2 Trump's job record is not unique; there are many examples of better growth on record than Trump's.  You might find this interesting, although I don't like attributing job creation overall to a president anyway. 

    While we can't look to the beginning of Obama's tenure for reference given he inherited a legitimate economic crisis, Obama's last three years of job growth all beat Trump's best year. However Obama extended the Bush tax cuts and lowered corporate taxes, and made manufacturing taxes even lower. Remind me to add that tidbit to the "Obama the Socialist" thread. 

    Unfortunately a lot of the jobs created recently are low-wage and have no employment benefits. They may have increased slightly under Trump given the tightening labor market (I'll have to look that up) though I think wages actually began to backslide last year pre coronavirus. If you are for saving the livelihood of the US worker through protectionist interventions, how do you feel about labor unions? 





  • Danielle
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    --> @Conway
    The next 4 years of their career begin with an oath: "I do solemnly affirm that I will faithfully execute the Office of President of the United States, and will to the best of my Ability, preserve, protect and defend the Constitution of the United States."

    Right, I was asking whether or not a President has much impact on the economy overall, and if not, whether their policy positions matter all that much (if not, perhaps voters should focus more on other things instead - things the President has more direct control over). I think some of a President's policies matter more than others. That's what I was looking to discuss. Here is the economic policy of the Trump administration. Do we think it was overall good, bad or neutral? Do we think some of the policies should be extended or revised? 
  • Conway
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    The concept of importing raw materials for development and distribution seems almost like something you should be able to take for granted as common sense in economics.  The US has lots and lots of coal (great nonrenewable resource for making steel) and a limited production of iron ore.  If we can stockpile steel from markets that naturally produce in excess that would be ideal, but if we aren't starting from an ideal standpoint, the criticism should be landed at whether or not temporary steel tariffs initiate the ultimate goal of fair trade.  

  • Greyparrot
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    --> @Danielle
     Sin taxes create higher costs for entrepreneurs which limits employment + growth opportunities. 

    correct, but the whole point of sin taxes is to offset the costs associated with that consumption, such as lung cancer hospitalizations, drunk driving, or large swaths of unemployed people.

    It's also aimed at incentivizing expenditures into areas that do not damage the fabric of society. Growth in sectors beneficial for society and a nation.
  • Danielle
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    --> @Greyparrot
     the whole point of sin taxes is to offset the costs associated with that consumption

    Yes and the whole point of my reply is that there are associated costs with tariffs as well. I asked if you had any evidence to suggest the long term benefits would pan out with short term costs. Do you? 


     Growth in sectors beneficial for society and a nation.
    So you're a communist. I'm curious: which job would you put me in per my skill set? 
  • Greyparrot
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    --> @Danielle
    Unfortunately a lot of the jobs created recently are low-wage and have no employment benefits. They may have increased slightly under Trump given the tightening labor market (I'll have to look that up) though I think wages actually began to backslide last year pre coronavirus. If you are for saving the livelihood of the US worker through protectionist interventions, how do you feel about labor unions? 

    First off I really liked your chart and it showed how complex the factors are involved in job creation. That said you are right, you can't say for sure it was tax cuts or deregulation.

    I'm only against the labor unions that destroy choice and opportunity, such as no right to work laws or compulsory membership. Labor unions should have to compete with other labor unions and justify their existence to their members. Monopolies are bad.

    Labor is a  form of capital and Cartels of capitalists are exploitive and corrupt only when there are no choices to escape the monopoly.
  • Greyparrot
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    --> @Danielle
    So you're a communist. I'm curious: which job would you put me in per my skill set? 

    I guess I sorta am a communist for thinking a 100% free market is unsustainable for the health of a nation.
  • Greyparrot
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    --> @Danielle
    Also, the government can't have competition, so government labor unions are god awful in practice. The public at large should set their working conditions at the ballot box instead of self-serving unions at taxpayer expense.
  • Greyparrot
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    --> @Danielle
    What do you think the opportunity costs are for a nation that outsources much of its unskilled labor? What are the costs to the global environment for outsourcing manufacturing to known polluters? Is out of sight out of mind a sustainable policy if you care about the global climate?