Recently Released Labor Department data shows that the unemployment rate fell from 3.8% to 3.6% at the close of the first quarter of 2019 (the lowest rate since 1969), that the US economy added 263,000 new jobs, and that Gross Domestic Product grew 3.2%. But some politically minded people seem disinclined to talk about the freeing of the productive capacity of American civilians that might have had something to do with this growth, and more interested in crediting…
Appearing on CNN, Senator Cory Booker (D-NJ) told Jake Tapper:
Americans are struggling. Their wages are too low, or decades low… For the last four decades, I don’t think they’ve budged that much.
When Tapper, to his credit, noted a simple, enormously contrary, fact, saying, “They’ve gone up 3 percent, which is more than it ever went up under Obama,” Booker couldn’t explain away his error, so he employed the expected response, crediting Obama:
I love that Trump is taking credit for a recovery that started under Obama…
But if a hurdler crosses a finish line in record time, is it appropriate to credit an interloper who, despite adding extra hurdles to the track, was unable to stop him running? Perhaps, just perhaps, one should credit the efforts of the runner, and learn that putting obstacles in the way of voluntary commerce slows progress.
The “recovery” under Barack Obama was, as the Cato Institute’s Michael Tanner notes, the slowest, most tepid recovery of economic output since World War Two.
Like Booker, Senator Amy Klobuchar (D-MN), doesn’t seem to care. She wandered down from beyond the Ice Wall of the North to dodge a similar point, when asked by Tapper:
Unemployment is the lowest it’s been since I was nine months old (1969). You’re really not going to give President Trump any credit for that in terms of his tax cuts, or deregulation, or anything he’s done?
Her response? A non-response and praise for Mr. Obama.
I think that we have had policies in place, starting with President Obama, that have aided that recovery.
Well, Cory and Amy, it’s true that the economy began growing again under Obama, but it did so despite his actions, not because of them. And the recovery was not only the weakest since World War Two, it got even worse in Obama’s final year.
As Tanner observed in September of 2018:
(It) is noteworthy that growth had slowed during Obama’s last year in office, dropping from 2.3 percent in the second quarter of 2016 to just 1.8 percent in the final quarter.
That’s not good, and, evidently, political autocrats like Booker and Klobuchar have deleted it from their programming.
But, things changed once Obama departed and new policies were put in place. Again, in the fall of 2018, Tanner added,
Unemployment rates for women, African-Americans and Latinos are all at multi-decade lows.
And the rates have improved on nearly every front, as just noted by The Associated Press:
The unemployment rate for women fell last month to 3.1%, the lowest point since 1953. The rate for Latinos dropped to 4.2%, a record low since 1973, when the government began tracking the data… For Asians, joblessness has matched a record low of 2.2%. And the unemployment rate for veterans of the Iraq and Afghan wars dropped to 1.7%, also a record low.
Meanwhile, the unemployment rate for African Americans, stood close to its 2018 record low of 6.0%, at 6.7%.
What appears to have contributed to the weak recovery under Obama, and the surge after he left office?
Policies that, under Obama, hampered or threatened to hamper free market growth, and policies under Trump that worked to remove some of those burdens, or give hope that they would.
As Wayne Crews, Vice President for Policy and a Senior Fellow at the Competitive Enterprise Institute told me:
The environment we were in under Obama was one where business had a feeling that government was not disinclined to step in and regulate… It was very much an environment under Obama where business felt like the regulators were at their heels.
When Obama left, the Federal Register (the listing of federal regulations) hit 95,000 pages. That’s the highest it’s ever been in history.
James Broughel, Senior Research Fellow at The Mercatus Center at George Mason University, observed:
In a typical year, somewhere between 3,000 and 4,000 regulations are finalized by the federal government… During most of the Obama years it was somewhere between around 3,500 and 4,000… per year, from all federal agencies. That number has come down somewhat during the Trump Administration… 2017 was actually the lowest year on record going back to the mid-Seventies when the government printing office started collecting these numbers… Less regulation is a good thing.
And he notes:
In particular, the areas where we’re seeing, really, the biggest difference across administrations are for the… “major regulations”. These are regulations that are expected to have an impact of $100 million or more per year. Those regulations have come down substantially under the Trump Administration.
Broughel observes that those have been estimated to cost between $2 trillion and $4 trillion annually, with some experts estimating the costs as high as $30 trillion a year.
He also notes that with Trump’s initial reductions in “major regulations”, it’s possible that gun-shy entrepreneurs started to relax.
And, lest we forget, there’s the whopper of all mandates, Obamacare (the ACA), which not only added heavy expenses on tens of thousands of businesses, it’s one of the factors behind the slow growth of full-time employment.
Michael Farren, Research Fellow at Mercatus specializing in labor, economic development, and transportation issues, observed that once the “Great Recession” hit, the number of people working part-time but seeking full-time employment more than doubled, and stayed high for a long time.
And so the question is, ‘Why did it take so long to get back to that point?’ And the fact of the matter is that the ACA did make it more expensive to hire full-time employees rather than part-time employees.
But President Trump’s tax plan appears to be another major economic factor for improvement.
Tax reform is a big area where you, essentially, stimulated an economy where you returned money that would otherwise have been taken by the government through taxation.
Paul Katzeff, of investor’s Business Daily, observed that in 2017 Trump lowered marginal rates for all of the seven IRS brackets save the 0% and the second-highest, 35%, bracket, offering savings of over $2,000 to a single $90,000/year earner.
And David Floyd notes for Investotopia, that the Trump plan doubled standard deductions for single filers, and nearly doubled them for married couples filing jointly. It eliminated the Obamacare mandate, changed the measurement for so-called “Bracket Creep”, and nearly doubled the exemption for the inheritance tax.
One cannot over-emphasize the importance of these measures when it comes to allowing civilians the right to control the fruits of their own labor, and that includes business owners, who saw a decrease in corporate taxes from 35% to 21%.
This is important. This money does not belong to Cory Booker or Amy Klobuchar. These businesses, these marriages, these households, these bank accounts – none of them belong to the politicians who would tell others how to live.
And none of the politicians should credit a former President for an economy that is driven by unassuming civilians who simply try to serve others in a market that he made inarguably less free.
It is the tiny freedom they have found shining like a beacon after he has departed, and the hope of more, that has given them the confidence to expand the US economy.
Nothing can expand an economy but freedom.