NDN Blog

NDN Applauds New Democrat Coalition Letter On Section 232 Auto Tariffs

NDN is pleased to pass along a letter released today by the New Democrat Coalition that strongly criticizes the President for withholding the Section 232 report on potential auto tariffs that the President is legally required to release to Congress. This refusal to respect the basic separation of powers in our government is another threat to our constitutional framework, and follows repeated illegal impositions of tariffs without the consent of Congress.

NDN has long urged Congress to challenge the President's reckless and extra-constitutional tariff policies, and we are very pleased that the New Democrat Coalition has taken this important step. You can find the letter here, and below.

New Democrat Coalition Letter On Section 232 Auto Tariffs

Dear President Trump,

American autoworkers, parts suppliers and retailers, dealers, vehicle service providers, and millions of consumers have lived under the threat of tariffs since you initiated the Section 232 investigation into auto imports on May 23, 2018. The Secretary of Commerce submitted the Section 232 report to you in February 2019; however, the report continues to be hidden from Congress and the public.

As Members of the New Democrat Coalition Trade Task Force, we once again want to reiterate that we do not believe that imported automobiles and auto parts and the hard-working Americans in the auto sector are a national security threat. As you have admitted publicly, there is no national security risk from automobiles and auto part imports. In fact, your abuse of the Section 232 tariff process jeopardizes our national security by alienating our allies and threatening the economic security of American workers. Imposing tariffs under Section 232 on autos and auto parts for reasons not related to national security clearly oversteps the authority granted by Congress.

Further, to help bring more transparency to this process, Congress included a provision in the Consolidated Appropriations Act for Fiscal Year 2020 which required the release of the section 232 report by January 19th of this year. You signed this legislation into law; however, you continue to refuse to release the report to Congress and the public.

You are therefore not only in violation of Section 232 of the Trade Expansion Act of 1962, but also the Consolidated Appropriations Act for Fiscal Year 2020.  Your willful disregard for these laws threatens American workers as well as the balance of power that is so essential to our Constitution. We implore you to not only release the Section 232 report on imported automobiles and auto parts as required by law, but strongly urge you to abandon any further tariff action that threatens the American automotive sector, auto workers, and our economy.

We look forward to the immediate release of the Section 232 auto report to Congress and the abandonment of the tariffs you are considering implementing. 

Sincerely, 

Reps. Terri A. Sewell (AL-07), Suzan DelBene (WA-01), Ron Kind (WI-03), Rick Larsen (WA-02), Gregory W. Meeks (NY-05), Lizzie Fletcher (TX-07), Don Beyer (VA-08), Veronica Escobar (TX-16), and Susan Davis (CA-53)

Trump's New Budget Proposal Is Incoherent Yet Immensely Dangerous

Three years of economic policy under the Trump administration are well represented by just a few words: incoherent yet immensely dangerous. First, incoherent. The President promised that his tax cut would pay for itself and super-charge economic growth to a sustainable 3%/year. Instead, the tax cut has cost over $180 billion/year and growth has never come in at 3% or higher during his Administration (and was just 2.3% in 2019). Furthermore, Trump promised that his trade war would revitalize manufacturing and create far more jobs than during the Obama administration. Instead, his tariff policies have led to a deep manufacturing recession and job growth through his first three years is almost 40,000 jobs/month slower than during Obama's second term.

Second, immensely dangerous. As a result of Trump's attacks on Obamacare and his support for new restrictions on Medicaid access in the states, the uninsured rate has begun to rise rapidly after years of declines under Obama. In 2019, almost 8 million fewer people had health insurance than did when Trump took office in 2016. In addition, the sharp decline in pollution of almost 25% from 2009 to 2016 has rapidly reversed under Trump. As a result of his gutting of several major environmental programs such as the Clean Power Plan, emissions have actually increased by over 5% since 2016, a development that his own EPA estimates will cause 1,400 additional deaths per year in the US. 

It is fitting then that the budget proposal released by the administration today continues this trend of being implausible yet significantly harmful to the most vulnerable Americans. First, the budget proposal projects economic growth of 3.1% in 2020 and 3%+ every year up to 2024. This is a wildly unrealistic and downright laughable estimate. Growth was 2.3% in 2019, and the IMF and Fed both estimate that it will be just 2% in 2020. Furthermore, the Fed projects that growth will hit just 1.9% in 2021 and 1.8% in 2022, nowhere close to the administration's 3% estimate.

And second, the budget proposal includes significant cuts to the social programs that disproportionately help poor Americans. Trump's proposal would cut Medicaid and food stamps by almost $300 billion and reduce federal disability benefits by almost $100 billion, targeting literally sick, hungry, and disabled Americans. Furthermore, he proposes significantly cutting the budgets of critical future-looking federal departments such as the Environmental Protection Agency by 27% and the Department of Health and Human Services (which funds medical research organizations such as the CDC and NIH) by 9%. For more on NDN's work on economic and trade policy under the Trump administration, please click here.

Trump's Make-Believe Economic Record

During last night's State of the Union address, Trump heavily focused on his supposed economic achievements and tried to contrast his record with one of decline under Obama. He described a world in which the economy had been long suffering under the Obama administration, but was now prosperous and strong thanks to his policies. Of course, the entire story is preposterous. While it is true that the economy is quite strong today (although large structural problems remain), that strength is a result of a largely unbroken trend that began under President Obama. Indeed, most macroeconomic indicators show either a continuation or slight decline in the pace of economic progress under Trump compared to Obama's 2nd term.

First, job growth has slowed moderately under Trump. From January 2013 to January 2017 under Obama, monthly job growth averaged 217,000 jobs. From January 2017 to December 2019 under Trump, meanwhile, it has averaged 177,000 jobs. Similarly, real median household income grew at an average annual rate of 2.6% from 2012 to 2016, while it has risen at an annual rate of only 1.1% in 2017 and 2018.

The only macro indicator that has seen even a slight pick-up has been economic growth, but even this will very likely be the same as under Obama after the 2020 data is in. In Obama's second term, quarterly GDP growth averaged 2.37% while so far quarterly GDP growth under Trump has averaged 2.54% - already very similar. For 2020, however, the IMF projects that growth will be 2%, meaning that quarterly GDP growth for Trump's four years will likely average 2.41%, essentially identical to the 2.37% average growth under Obama. 

And this doesn't even get into the significant decline in other key indicators of economic well-being under Trump. After the uninsured rate fell from 16% in 2012 to 11% in 2016 thanks to Obamacare, the trend has sharply reversed under Trump and the uninsured rate rose to 14% in 2018. Furthermore, after air pollution declined by 20% from 2012 to 2016 thanks to tighter environmental regulations under Obama, that trend has also gone backwards and pollution rose by 6% from 2016 to 2018. Even Trump's EPA estimates that this increased pollution will cause about 1,400 more deaths per year. As can be seen, it is simply not true that Trump has overseen an economic revival since 2016, and actually almost every macro-economic trend has declined to some extent under Trump. For more on NDN's work on trade and economic policy under the Trump administration, please click here.

The Threat Of Trump's Trade Agenda

This piece was originally published by the Washington Monthly. Below is an excerpt from the piece, and you can find the whole piece here.

Democrats should be pleased with the successful negotiations over the USMCA and the deal’s passage in the Senate. While the trade agreement’s scope is clearly quite limited—and more work remains to be done on the environmental impact of continental trade—the pact achieves some much-needed tariff reduction, modernizes some aspects of digital trade, and helps to improve labor standards in Mexico. Importantly, House Democrats were able to negotiate stronger labor rights for workers on both sides of the U.S.-Mexico border, with more effective enforcement provisions for those rights, which helped give the deal more teeth. These are all positive steps that will help American workers and businesses.

All that said, Democrats cannot wash their hands of trade policy now that the USMCA has been completed. Quite simply, the deal is only a minor piece of the president’s overall trade strategy. His larger trade agenda is undoubtedly malignant. He has attempted to tear down the global trading system by illegally circumventing the legislative branch­—moves that must be challenged strongly by Congressional Democrats. Otherwise, their win on the USMCA will be significantly undermined by a broader trade policy that has created major losses for incomes, jobs, and the rule of law. 

To read the rest of the piece, please click here.

Congress Must Have A Robust Post-USMCA Trade Agenda

Congress should be pleased with the soon-to-be successful passage of the USMCA, a deal that is quite limited in scope and impact but does achieve some real advances in modernizing digital trade, reducing agricultural tariffs, and improving enforcement of labor protections. However, it is critical that Congress doesn't wash its hand of trade policy now that the USMCA debate is over, because the President's larger, destructive trade strategy continues to erode the global rules-based trade system. Over the past two years, Trump has an undertaken an unprecedented experiment with protectionism, hoping to rejuvenate US manufacturing and broader jobs and growth. Instead, manufacturing has been driven into a deep recession while hundreds of thousands of jobs and tens of billions of dollars in total income growth have been destroyed. It is time now that Congress finally step up to challenge this failed experiment. 

First, Congress must end the trade conflicts that even in the best case scenario don't serve any purpose, are largely targeted at US allies, and are done merely to harm the global trading system. The most important of these is to re-open the WTO's dispute resolution court, which was effectively shut down when the Trump administration refused to appoint new judges to fill open seats. With the dispute process closed, there is no legal way for countries to appeal protectionist measures taken against them, a process that has benefited the US significantly over past decades (indeed, the US has won 11 disputes against China, compared to China winning only 4 against the US) and whose dismantling serves no US interest whatsoever. Congress must also once and for all repeal Trump's tariffs on key US allies who are not committing trade abuses, particularly the steel and aluminum tariffs and threatened auto tariffs on Japan and the EU. These tariffs serve only to weaken jobs and income growth both in the US and abroad, and have no strategic goal because our allies aren't committing any trade abuses that would justify them. 

Second, Congress must develop a coherent strategy to address the more difficult trade problems facing the country. The most prominent of these is dealing with China, a country that systemically commits trade abuses but whose "phase one" deal with Trump contains no details about addressing them. The President's unilateral trade war with China has not created the leverage to force them to actually pursue structural reforms in their economy, while significantly harming the US economy in the process. Instead, Congress must begin crafting a multilateral strategy that works alongside our trading partners and allies and offers benefits to China if it commits to genuine liberalization. You can read more about NDN's analysis of the economic costs of Trump's trade war here, and find NDN's broader work on trade and economic policy under the Trump administration here.

Trump Concedes The Trade War To China

NDN was an early opponent of the trade war launched in March 2018 by the Trump Administration. We argued that China did in fact commit trade abuses on a wide scale, but that the most effective mechanism for forcing a change in that behavior was through multinational trade negotiations involving US allies that offered China benefits if it committed to genuine liberalization (such a mechanism, the TPP, did exist before Trump unilaterally withdrew in January 2018). We predicted that Trump's alternative, a significant unilateral trade war with China, would instead cause significant pain to the US economy, would not create the leverage to force actual structural reforms, and would likely end with Trump "achieving" some cosmetic concessions from China as he worried that the trade war would harm his re-election chances in 2020.

As has become clear over the past week, this is exactly what has happened. The trade "deal" announced on Friday contains no details about the structural reforms that were the explicit justification for the trade war in the first place - no meaningful commitments on forced technology transfers, no meaningful commitments on industrial subsidies, and no changes to Chinese law regarding IP theft (for years China has made similar "directives" on IP reform as it did in Friday's announcement but has habitually broken them). Instead, the only "achievement" from the deal was a promise by China to increase its purchases of US agricultural exports, but even here there are major problems.

First, the level of promised exports is just not very large compared to the pre-trade war trend. The Council on Foreign Relations estimates that without the trade war, US agricultural exports to China would have hit $27 billion in 2019 and over $30 billion by 2022. In addition, the International Trade Commission estimates that the TPP would have further increased US agricultural exports by $7 billion/year - bringing the total to about $37 billion by 2022. In the new China deal, meanwhile, Ambassador Lighthizer announced that China would purchase a total of about $40 billion in US agricultural products in 2021 and 2022. As a result, this "deal" gets American farmers a paltry $3 billion/year more in exports than if Trump had done nothing on China and signed the TPP deal that was on his desk in January 2017.

Second, it isn't even particularly likely that China ends of purchasing this level of agricultural exports in the first place. A key sticking point for the Administration was that China agree to this level of purchases in a written and signed contract, but the trade deal didn't do this and instead just included a promise by the Chinese that they would do this level of purchases (the Chinese themselves gave no specifics on their level of purchases). Even more striking, Chinese officials on Friday still said that their level of purchases would be market-oriented and in compliance with WTO rules, while the $40 billion in purchases likely runs afoul of both of those metrics. As a result, it is very unclear if China will even uphold their end of the bargain, and over the past year they have routinely committed to purchases that they have then not done.

Finally, even if the purchases get done, encouraging the Chinese government to control the export process of the whole Chinese economy is counter to the entire economic strategy of the US vis-a-vis China. We want China to become a more market-oriented economy with a private sector free to import goods from firms and countries of their choosing, but this directly increases state control by the Communist Party. Furthermore, the purchases almost certainly violate WTO rules (for they impose de facto quotas on agricultural exports from other countries), something ironic given that the US has long (correctly) attacked China for violating the WTO with their trade policies. 

What, then, has Trump's trade war with China actually accomplished since it began in March 2018? It has reduced US economic growth by 0.6% ($128 billion), cost over 300,000 American jobs, and reduced the disposable income of the average American household by over $1,000. And what has Trump gotten from China in return? A paltry amount of increased exports and no structural reforms. You can read more about NDN's analysis of the economic costs of Trump's trade war here, and find NDN's broader work on trade and economic policy under the Trump administration here.

Analysis: Trump Is The Least Popular First-Term President Since WW2

This piece was originally published on May 1st, 2019 and was updated with the latest polling data on November 21st, 2019.

Since the midterm elections last November, perceptions of Trump's popularity have swung rapidly as highly visible controversies such as the government shutdown and the release of the Mueller Report and Barr Summary have unfolded. Over the next few weeks, I'll take a look at some interesting developments in the polling, including Trump's popularity, the Democratic presidential primary, and the general election in 2020, and will comment on important take-aways from the data.

To start, how popular is Trump right now? While much of the conventional wisdom still portrays the President as a strong figure, the reality is that he continues to be by far the most unpopular first-term President in the modern era. According to FiveThirtyEight, Trump today sits at a -11.7 net approval rate. How does this compare to previous Presidents? Firstly, the lowest net approval rate that either Obama or George W. Bush hit during the entirety of their first 3 years in office was -8.7, so Trump is significantly lower than his immediate predecessors. Secondly, looking at all 11 Presidents since 1953, net approval at this point in their first term averaged +14.6, so Trump is more than 25 net points worse than his predecessors (and this average isn't skewed by potential problems with polling several decades ago - the average net approval of just Obama, Clinton, both Bushes, and Reagan at this point in their terms was +9.8).

Finally, let's look at how often Presidents over the past 60 years have experienced the type of heightened disapproval that Trump sees today. From Eisenhower until Obama, looking only at the first 3 years of each President's first term, Presidential net approval has been at -10 or worse for a total of 262 days (or just 2.0% of the time). By contrast, Trump has been under -10 net approval for 871 days (or 84.1% of the time).

In the 2018 midterm elections, this dramatic level of disapproval (-10.4 net on November 8, 2018 compared to -11.7 today) led to Democrats winning the popular vote by the largest margin of any midterm since 1986. Also within that midterm victory was a significant rejection of Trump by almost all of the emerging demographic groups that will form an increasingly large share of the US electorate in years to come, especially non-white and young voters. This trend has only accelerated since election day. According to Civiqs polling data, Trump today has a -36 net approval rate among voters under age 35, and is -49 among Latino voters. Similarly, the Republican Party currently has a net favorability rate of -42 among under 35s and -50 among Latinos, whereas the Democratic Party is net even among under 35s and +22 among Latinos. This represents an enormous decline since 2004, when George W. Bush actually won voters under 45 and lost Latino voters by only 9 points. 

While much of the media continues to hold up Trump as a powerful political figure who can conjure up electoral victories out of nothing, in fact he continues to be the most unpopular first-term president in over six decades and is leading Republicans down the path of the California GOP by ignoring those demographic groups that will over the next decade become more and more critical to winning elections.  Indeed, the future for Republicans in critical battleground states looks grim, with voters under 35 disapproving of Trump by a net 34 points in Pennsylvania and 28 points in Florida. Even in solid red states, Trump is losing the argument with the next generation of voters, with net approval among under 35s at -25 in Texas and -13 in Mississippi.

New Polls Show Impeachment Moving Into Dangerous Territory For Trump

When Nancy Pelosi announced the beginning of an impeachment inquiry against President Trump on September 24th, all eyes turned towards the move’s impact on public opinion. While Trump has been the consistently least popular first-term President in the postwar era, Americans have in fact largely opposed impeachment proceedings, something which undoubtedly played a role in Democrats’ hesitation to fully embrace impeachment. However, over the past week, public opinion has dramatically changed, and it is now very likely that more Americans support both an impeachment inquiry and impeaching the President than oppose them.

First, support for starting an impeachment inquiry has significantly increased over the past week. Five polls – CNBC, CBS, Politico, The Hill, and Monmouth – asked this question both in August/early September and this past week. Averaging those five polls together, just 38.8% of Americans supported the inquiry in August/early September, compared to 50% who opposed it (net -11.2 percentage points). Over this past week, however, those same polls found that 47.6% of Americans supported the inquiry, compared to just 44% who opposed it (net +3.6pp). In a matter of days, support for the inquiry increased by a net 14.8pp, a very significant development given that new information involving the Ukraine scandal and others continues to surface daily.

Net Support For An Impeachment Inquiry

Second, and potentially more surprising, support for the outright impeachment of Trump has now risen to a plurality of Americans. Five polls – Quinnipiac, CNN, Ipsos, Civiqs, and Monmouth – have asked this question in August/early September and this past week (some of these polls specify impeachment and removal, while others just say impeachment). Averaging those five polls together, only 39% of Americans supported impeaching Trump in August/early September, compared to 52% who opposed it (net -13pp). Over this past week, however, support for impeachment surged to 46.4%, compared to 46.2% who opposed it, meaning that a slightly larger number of Americans want Trump impeached now versus those who do not.

Net Support For Impeachment

Finally, this rapid change in support for impeachment proceedings has been paralleled by a large drop in Trump’s approval rating over just the past week. On September 24th, the day that Pelosi launched the inquiry, Trump’s net approval stood at -9.8 according to FiveThirtyEight’s polling aggregate. In just seven days, it has fallen to -12.1. This decline of 2.3pp is especially notable because, over the 20 months from January 2018 to the present, the total range of Trump’s net approval has been just 7.8pp (from a low of -16.7 to a high of -8.9). As a result, this decline in just 7 days represents almost 1/3 of the entire movement in Trump’s approval over the past two years.

Overall, then, this first round of polling since the Ukraine scandal and the beginning of the impeachment inquiry represents very dangerous territory for the President. Larger numbers of Americans want him impeached than not, and this is before the House of Representatives conducts new impeachment hearings and likely even more leaks from the White House, two events that could increase support for impeachment even further.  

America’s Experiment With Protectionism Is Failing

Starting in March 2018, the United States has undertaken its largest experiment with protectionism since the end of the Second World War. The average tariff on all imported goods today sits at 6.1%, its highest level since 1947 and compared to just 1.5% in 2017. For decades, large segments of the political arena on both the left and right have argued that greater protectionism is necessary to protect American wages, jobs, and manufacturing. As a result, the effects of this experiment are critical not just to the Trump presidency, but to the ongoing bipartisan debate over free trade and tariffs. A year and a half into its implementation, however, the experiment appears to be failing. Jobs have not come back to the United States, domestic manufacturing has been weakened, the average household has lost over $1,000, and growth has slowed.

The Trade Deficit Has Continued To Rise, And Manufacturing Hasn’t Returned

The most important argument made by the President in defense of his protectionist strategy was that the tariffs would lead to a reduction in imports of manufactured goods and a closing of the trade deficit, thus spurring a revival of domestic manufacturing, jobs, and wages. Importantly, however, this import substitution has simply not happened. From January 2018 to July 2019, the US trade deficit has actually expanded by $2 billion/month (an increase of about 3.5%) in spite of the tariffs. While the trade deficit with China has fallen by $3 billion/month (a decline of 8.5%), those imports have simply been replaced by ones from other trading partners rather than by production in the US. The trade deficit has expanded by $6.6 billion with the EU (+49%), $3.5 billion with Mexico (+77%), $2 billion with Vietnam (+71%), and $0.7 billion with Japan (+13%), more than making up for the reduction with China.

As a result, there has been no re-shoring of manufacturing production that was previously “lost” to foreign imports, something that was critical to Trump’s argument that he would revive jobs and wages. It is important to note that this central argument is of course nonsense, because the trade deficit is a function of domestic national savings and investment, not trade policy, so a structural reduction in the trade deficit would also necessarily either increase the savings rate (thus reducing consumer spending) or reduce investment, both of which would harm jobs and wage growth. However, even if we take Trump’s argument at face value, it has not succeeded.

What has happened instead is that the tariffs have cut off US access to important export markets, increased the costs of inputs for businesses, and increased the prices faced by all American consumers. As a result, on every metric that Trump promised to improve – exports, manufacturing, economic growth, jobs, and incomes – his protectionist strategy has instead created a slowdown if not outright contraction.

Export Growth Has Collapsed

First, foreign retaliation to Trump’s trade wars has led to a closing off of key export markets for US firms and workers. As a result, export growth has slowed significantly since the trade war began, from an average of +9.1%/year in 2016 and 2017 to just +0.1%/year in the first half of 2019. In particular, farmer bankruptcies have hit a 6-year high as prices for soybeans and other products have collapsed in the face of weaker foreign demand.

Manufacturing Has Weakened

Second, US manufacturing – the industry that Trump based his campaign upon helping more than anything else – has seen an enormous slow-down since early 2018 as a result of weakened foreign demand for manufactured goods and higher input costs for factories. In August 2019, the manufacturing sector contracted for the first time in three years, and manufacturing job growth has ground to an almost complete halt this year – through the first eight months of the year job growth in manufacturing was just 5.5k/month compared to 15.8k/month in 2017.

Economic Growth Has Slowed

Third, overall economic growth has been severely impacted by the trade war. New research from the Federal Reserve estimates that the trade war will reduce US GDP growth by 0.8 percentage points in 2019 and more than 1.0pp in 2020, while Goldman Sachs projects the tariffs will reduce 2019 growth by 0.6pp. Furthermore, the IMF now projects that the trade war will reduce global growth by 0.8pp in 2020. Rather than increase growth to a sustainable 3%/year level as promised by the President, growth has instead rapidly decelerated since the tariffs were first implemented.

Job Growth Has Fallen

Fourth, job growth has weakened considerably as firms have fewer export opportunities and higher input costs and consumers are faced with lower disposable income. Moody’s Analytics estimates that the trade war with China has already destroyed 300,000 jobs, and projects that 450,000 jobs will be lost in total by the end of 2019 and 900,000 by the end of 2020 if the trade war continues. As can be seen below, both overall job growth and manufacturing job growth have declined significantly since March 2018.

Income Growth Has Reversed

And finally, real income growth has now begun to slow sharply after remaining relatively steady in 2017 and 2018 (although at lower levels than in 2015 and 2016). JP Morgan estimates that the average household will lose $1,000 by the end of 2019 as a result of the tariffs, while reduced hiring by firms has put pressure on nominal wage growth. As can be seen below, the slight increase in nominal earnings growth in 2018 has stopped and begun to roll-back in 2019 as the trade war has escalated, and nominal earnings growth is today slower than at the start of 2018.

Overall, then, what has the trade war gotten us? To be sure, Trump’s goals of reducing the trade deficit and thus bringing manufacturing production and jobs back to the US have not happened. Instead, this great experiment in protectionism has weakened essentially every economic metric that we measure. Over 300,000 workers have lost their jobs, middle class households are $1,000 poorer, and the country as a whole will have lost at least $100 billion in economic output by the end of the year. While much of the American political establishment is still enthralled with protectionism, the American people have largely come around to this reality. Poll after poll finds a wide majority of voters in favor of free trade and opposed to Trump’s tariffs – for example, a new Pew poll from July finds that Americans say free trade agreements are a good thing by 65% to 22%, with Democrats in particular in favor by a 73% to 15% margin. It is time now for Congress, and the 2020 Presidential candidates, to step up and end this disastrous experiment with protectionism.

New Data Highlights That Trump’s “Greatest Economy Ever” Wasn’t Actually So Great In 2018

This piece was originally published on Medium.

The performance of the economy in 2018 has been a critical benchmark for Trump’s repeated claims that he has brought the American economic engine to its highest levels in decades. Both of Trump’s signature policies on the economy, the tax cut and the protectionist trade policy, were implemented at the start of the year (the tax cut in January and the trade policy in March), so how the economy did in that period is crucial to the President’s economic legacy heading into the 2020 elections.

And at first, the data did appear to show the economy performing quite well in 2018. Unrevised data from the Census Bureau showed 3% GDP growth from Q4 2017 to Q4 2018, hitting the Administration’s target and quite a bit higher than the 2.5% growth from Q4 2016 to Q4 2017. Similarly, unrevised data from the Bureau of Labor Statistics showed a significant increase in employment, with monthly job growth averaging 223,000 per month in 2018 compared to 179,000 per month in 2017. And while the economy under Obama hit a 3%+ year-over-year growth rate in 4 different quarters and jobs growth in 2014–16 averaged 224,000 jobs, the numbers under Trump were still a real achievement. Finally, business investment (excluding energy) also seemed to pick up its rate of expansion, with annualized growth of 4.8% in 2017–19 compared to 4.5% in 2013–16. All in all, it had seemed like three major indicators of economic health had improved to some extent in 2018 under the Trump administration.

But then came the revisions. Over the past month, the Census Bureau and BLS have completed their annual revisions to the previous year’s data, and the result has been an across-the-board cut to the performance of the economy according to each of these metrics. First, the Census Bureau revised GDP growth in 2018 down significantly to 2.5%, meaning that not only did 2018 growth come in way below Trump’s 3% target but it also actually declined compared to 2017 (which was revised up slightly to 2.8%). Second, the BLS reported that actual job growth from March 2018 to March 2019 was a whopping 501,000 jobs weaker than previously reported. As a result, rather than creating an average of 223,000 per month in 2018, the economy actually saw job growth of just 185,000 per month, barely above the 2017 average of 179,000 per month. Finally, annualized business investment (excluding energy) in 2017–19 was revised down a very large 0.6 percentage points (from 4.8% to 4.2%), meaning that business investment was actually slower in 2017–19 than in 2013–16 when it averaged an annualized 4.6% (slightly revised up from 4.5%).

Taken together, this updated data paints a devastating picture of the failed promises of the Trump economy. The tax cut and protectionist trade policy, through reduced taxes on corporations and tariff-based incentives to produce in the US respectively, were supposed to create a surge in business investment which would then ignite both economic and jobs growth. Instead, there is little evidence that business investment outside of the energy sector picked up at all in 2018, and both economic growth and jobs growth either declined or remained constant from 2017 to 2018.

What has changed though? The escalating costs of these Trump policies. The CBO now estimates that the deficit will hit $960 billion in 2019, an astounding 64% increase over the $585 billion deficit in 2016 that Trump inherited. Furthermore, the CBO projects that the deficit will grow to an average of $1.2 trillion over the next decade.

As the 2020 election grows near, Trump has continuously touted the “greatest economy ever” as the result of his tax cut and trade policies. However, what we know now is that the trend of economic, jobs, and investment growth was really no stronger in 2018 than in 2017, before these policies were enacted. Instead, those very policies have created serious risks to future growth, including a rapidly slowing manufacturing sector, decelerating global growth, and an unprecedented fiscal deficit.

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