Follow the Money

Trump’s SOTU was mostly bombast and cheap emotional appeals, but he did find time to brag about all of his accomplishments, particularly the economic accomplishments.  The economy certainly is booming, and Presidents commonly take credit for this (although they seldom take the blame for the reverse).  Here is a bit of information that might prove useful in assessing Trump’s braggadocio.  

The stock market is continuing its astounding growth, reaching record levels on almost a weekly basis.  But the important term here is “continuing.”  The growth of the Dow over the past year continues a trend established early in the first year of the Obama administration.  And the value of the Dow at the end of the Obama administration was approximately 2.4 times what it was when Obama took office.  (And surely there is some irony in the fact that the Dow dropped over 500 points in the two days preceding Trump’s speech.)

Trump also congratulated himself on job growth during his first year in office.  And it wasn’t bad, but it also wasn’t as good as each of the last six years of the Obama administration.  And corporate profits reached historically unprecedented highs under the Obama administration.  Prior to the Obama administration, the record for corporate profits was reached in 2006 under Bush 2.  But corporate profits exceeded that high during each of the last seven years of the Obama administration.  We can only hope that this trend, along with the trends in the stock market and in job growth, continues under the Trump administration.

Republicans like to claim that the economic successes of the Clinton administration were merely the result of Reagan’s tax cuts and deregulation.  (Interestingly, Republicans don’t claim that Bush 2 laid the foundation for Obama’s successes, perhaps because the crowning achievement of the Bush 2 administration was the 2008 financial collapse.) One wonders if they will credit Obama for laying the foundation of Trump’s successes.  I’m guessing not.

Trump claimed other economic achievements—that his tax cut was the largest in history (it’s not), that the US is exporting energy (it is and has been for awhile), that he has done away with more regulations than any other president.  This latter claim may actually be true.  Trump hasn’t done away with all that many regulations, but he has stopped a great many from being implemented.  In this one thing, at least, perhaps Trump has managed to serve the corporate sector more generously than Obama.

Another long-standing trend, a less encouraging one, that continued to develop under Obama and will likely continue under Trump is the massive income and wealth inequality that is becoming one of the more notable characteristics of the United States.  Inequality is bad not only for the working and middle class families who find themselves increasingly priced out of the life they have worked to build for themselves.  It is bad not only for the poor who find themselves priced out of any sort of decent life at all.  It eventually depresses the economy and results in a society that is less resilient and that possess fewer resources with which to address its needs.  And this leads to populist movements, like the Bernie Sanders campaign, that push ideas that have considerable emotional appeal but make little economic sense.

Standard advice for someone who aspires to understand politics is “follow the money.”  These days, that’s not too hard.