The Economy Not Worth Defending: A Response to Trump’s State of the Union


Photograph Source: Bob Dass – CC BY 2.0

This president’s delusions of grandeur have few limits, as witnessed by the headlines across the nation following his state of the union. One New York Times headline read: “Trump Claims End of ‘American Decline.” CNN reported that “Trump’s economic focus is a savvy one from a political perspective” when “poll after poll shows that a majority of Americans approve of how he has handled the economy.”

Trump himself bragged in his latest speech that “the years of economic decay are over,” and that the U.S. economy “is the best it has ever been.” His claims were based on the performance of the stock market, which he claimed has “soared 70 percent…since my election…adding more than $12 trillion to our nation’s wealth,” and in response to an “unemployment rate” that “is the lowest in over half a century.”

To the nearly half of Americans who approve of this president – 49 percent according to Gallup’s latest poll – Trump’s economic optimism overlaps with their own hopes and dreams. After years of high unemployment, wage stagnation, and rising inequality, Americans are desperate for some good economic news. But a closer examination of the data reveals the emptiness of the president’s words. We live in an era dominated by shameless political propaganda and “alternative facts,” so why should we expect more than misinformation from our president when it comes to the state of the nation?

To put it simply, the state of the country, if measured by indicators of human security and health, rests on shaky ground. On the economic front, Trump’s celebrations rely on bogus metrics that conceal the rising insecurity of American workers and families. GDP growth rates, stock market growth, and unemployment figures are hegemonic measures of economic “health” in that they are widely embraced in the news media and by political elites. But any serious analysis of Trump’s America reveals that this president’s policies – most notably his tax cuts for the rich – have increased inequality by further enriching the wealthiest 400 families in America, at the expense of the bottom 50 percent of income earners.

One of the best metrics to reveal this stagnation is median household income, which the U.S. Census Bureau says has remained “flat” under Trump. It increased just .8% in 2018, and by only 1.8 percent in 2017, compared to 5.2 percent growth in 2015 and 3.2 percent in 2016. The Trump tax cuts and the “Trump recovery” may have been a boon for wealthy Americans, but they’ve produced little of tangible financial value for main street America in terms of income growth.

Other metrics suggest rising insecurity for millions of Americans. Most concerning is the rise in the number of uninsured Americans, which has grown every year under Trump, despite falling during the late-Obama years. The total number of national uninsured, while standing at 18 percent of Americans in 2013, fell to 10.9 percent in 2016, following the ACA’s expansion of Medicaid, its introduction of the health care mandate, and the establishment of taxpayer-funded health care exchanges to assist Americans in buying insurance. “Obamacare” was systematically flawed from the beginning. It was a major boon for corporate health care interests and failed to regulate health care costs that have been spiraling out of control for decades. On the other hand, it provided much needed health care subsidies for millions in need, while expanding Medicaid for the nation’s poor, and outlawing the denial of health care based on “pre-existing conditions.”

In contrast, Trump’s assault on health care has produced rising insecurity. His repeal of the Obama mandate was accompanied by a massive growth in the uninsured, which had reached 13.7 percent of Americans by late 2018. In total, 7 million Americans have lost their insurance under this president, in just two years. Trump promised to repeal the ACA and to provide an alternative plan that would produce better outcomes. But all he’s done in four years is allow people to opt out of buying private health insurance plans that are increasingly unaffordable to working Americans.

Outside of the health care debacle, income and wealth inequality have continued their steady growth under Trump, as they did under Obama. Recent economic data reveals that income inequality reached its highest level in the last half-century under Trump, despite the president’s empty claims of record economic prosperity. And the richest one percent of American families now own a record 38.6 percent of the nation’s wealth according to the most recent data from the Federal Reserve. In no other period in modern history have so few owned so much, at the expense of the many.

And what of Trump’s own preferred economic metrics? It’s certainly true that unemployment is near a 70-year low, standing at 3.5 percent in December 2019. The only other periods in modern history that saw lower unemployment rates were the late 1940s (1948), the early 1950s (1951-1953) and the late 1960s (1968-1969). But these comparisons are highly deceptive. They fail to account for the rise of contingent labor in the modern era, with the overwhelming majority of new jobs created from 2005 to 2015 – 94 percent – falling into what Harvard and Princeton economists call “alternative work” arrangements. These “alternative” jobs in the modern gig economy include contract work, freelance jobs, temp agency positions, on-call positions, and employment with contract companies. These jobs are highly unreliable, often failing to provide Americans with stable work, a living wage, or adequate benefits such as health care and a secure retirement. Trump’s America provides a plethora of jobs to choose from. Whether any of them are worth taking is another question entirely.

What about Trump’s celebrations of American economic growth? A closer look reveals recent GDP growth rates are nothing to write home about. Annual GDP growth is nowhere near its historical high, with Trump’s tenure seeing its high-point in annual growth in 2018 at 2.83 percent. By comparison, Obama’s highest years of growth were 2014 and 2015, at 3.06 and 3.06 percent growth respectively. Taking a longer historical view, we see that growth rates were much higher in previous decades, compared to what we’ve seen under both Trump and Obama. The highest annual GDP growth rates of the 1990s ranged from 4 to 5 percent, 7 percent in the 1980s (1984), 4 to 5.5 percent in the 1970s, and a 5 to 6 percent in the 1960s. Comparatively, Trump’s economy performs worse, not only compared to Obama’s, but relative to the economic highs in recovery periods from the 1960s, 70s, 80s, and 90s.

We can learn a lot about which Americans Trump values by looking at his State of the Union rhetoric. Celebrations of the stock market speak only to the interests of high-income Americans, considering that the top 20 percent of income earners own an overwhelming 92 percent of all stocks. And discussions of the unemployment rate and GDP growth don’t mean much if most new jobs aren’t worth taking, and if the masses don’t see household income growth as a result of growing GDP.

Sadly, most Americans are unaware of the problems with using narrow metrics like GDP, stock market growth, and unemployment when assessing the state of the nation. This point is reinforced by Gallup’s own survey results, which show that more Americans in 2020 express confidence in the U.S. economy than at any other time in the last 20 years. This euphoria is linked to unrealistic assessments of the opportunities that are afforded to individuals in this economy, with seven in ten Americans agreeing in 2020 that it “is a good time to find a quality job in the U.S.” Euphoria over the availability of “quality jobs” now stands at a record high since Gallup started measuring this question nearly 20 years ago. But such optimism is undermined by the harsh realities of a crooked economy that increasingly fails to meet the basic needs of American workers and families.

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