Up until about 9 p.m. election night, the smug elites of the political-media establishment were unanimous in their faith that of course Queen Hillary of the House of Clinton Political Machine would vanquish the crass, inept Trump with no experience, no consultants, no visible “ground game,” no clue.
Now they’re immersed in shock, disbelief, grief, and despair. They’re indulging in anger at 60 million voters – not one of whom they’re acquainted with – people they disdain as racist ignoramuses. But the real motivations of Trump voters are not hard to understand. They fall in two, overlapping categories: Economic and cultural. In this post we deal with economics.
Hillary Clinton lost because her implicit promise was to preserve and build upon President Obama’s economic “accomplishments.” He managed to force a tax increase through Congress in 2012. She promised even higher taxes. She vowed to continue his breathtaking roll out of new regulations, burying employers, entrepreneurs and investors in prohibitions, mandates and mind-numbing complexity with harsh penalties, including stiff fines and even prison time for violations. And, of course there’s Obamacare, a government take-over of health insurance, coupled with complex new regulations of health care providers.
The voters’ obvious question was, after eight years, how have Obama’s economic policies performed? Let’s start with the most comprehensive measure of overall economic health, the quarterly, Gross Domestic Product reports from the Commerce Department. The first chart, above, measures economic growth during the economic recovery beginning with the first quarter after the end of the 2008-2009 recession.
The Obama era post-recession economy turned out to be the weakest since the government began issuing quarterly GDP growth reports in 1947. As the chart shows, we’re enduring a growth rate that is less than half of average.
The next chart, above, debunks Obama-Clinton claims of low unemployment. In fact, the only reason the official unemployment rate has declined at all, from it’s 9.8% peak in 2010 is an unprecedented reclassification of working age Americans from “unemployed to “out the labor force.”
The labor force participation rate is the percentage of working age people who “participate” in the labor force either by being employed or by being counted as unemployed. When jobless people become discouraged and don’t actively seek employment every week they are reclassified from “unemployed” to “out of the labor force,” and are no longer counted in computing the official unemployment rate.
This decline in the labor force participation rate during an economic recovery has never happened before. Because so many jobless people aren’t counted as unemployed the decline in the unemployment rate is, for the first time ever, a negative indicator. If all jobless people were counted, raising the participation rate to a pre-recession level the unemployment rate would be well above 9%.
The uncounted jobless are still there, still available for work, and when job openings are advertised some of them apply, increasing the supply of available employees, which results in lower wages for whoever is fortunate enough to land a job.
Most of them don’t research employment statistics but virtually every voter outside the Washington D.C.-Manhattan-Hollywood bubble knows someone who, after years of productive work has found him/herself without a job and without hope of finding a job that pays as well as the one he/she lost, or any job at all at any wage. Few of them saw our chart before voting but they “feel” the effects.
Finally, the federal debt. In response to the 2008-09 recession President Bush began and then President Obama – with the enthusiastic support of Congressional Democrats – ratcheted up the largest ever spike in federal spending. Obama’s promise was that it would “immediately jumpstart job creation.”
Obviously, massive spending didn’t deliver.
But spending was never cut back to normal levels. Even after four years of irresponsible and risky cuts to military budgets, federal spending in 2016 is an astonishing 63% higher than it was before the recession, after adjusting for inflation.
The third chart, below, illustrates the result of runaway, uncontrolled spending, an unprecedented, reckless escalation in government debt.
For his part, Donald Trump consistently promised tax cuts on business and employers couple with a regulation rollback, starting with a brilliant new requirement that for every new regulation imposed upon the American people, two existing regulations must be revoked. And of course, he will repeal Obamacare.
President-elect Trump overcame a lot of negative baggage to win the election. We at Liberty Works will enthusiastically support his initiatives to improve economic opportunity, dramatically increase employment and restore sanity to federal spending.