President Trump’s first state of the union speech was just as remarkable as his first year in office.
David Graham from the Atlantic had a good summary.
The reality is somewhat less rosy: By a wide margin, Americans believe that the nation is on the wrong track, and the president’s approval rating is historically low. Trump has struggled to push his agenda through Congress, just squeaking a big tax cut in at the end of last year. That presents three challenges for the president, and his speechwriters: How do you boast about victories you haven’t had? How do you present new proposals when many of the old ones are still on the table? And how do you handle the Russia story that seems to consume most of politics each week?
The answer from Trump was simply to conjure his own reality, outlining a set of some accomplishments, delivering the standard list of policy proposals, and ignoring the Russia probe altogether.
This president is not often good at hiding his emotions, but he did so Tuesday. As a result, not only was the picture he painted of America removed from reality, but Trump himself was also practically unrecognizable. The speech somehow managed to render Trump the one thing he almost never is: boring.
One has to go no further than his claims of economic success to reveal the gulf between reality and fantasy that exists in the White House.
Since the election, we have created 2.4 million new jobs, including 200,000 new jobs in manufacturing alone.
Only 1.8M new jobs were created since he took office according to the Bureau of Labor Statistics. Instead of citing the real figure, he chose to cite a figure that included three months where jobs could only be attributed to Obama. It’s also because during his first full year in office, the 1.8M new jobs was the slowest job growth since 2010. The reason is that employers are having a hard time finding workers, which is what he also could have said. Instead he left the impression that this was an extraordinary accomplishment.
Of those jobs created during his time in office, 184,000 were in manufacturing which would also been a good number compared to the 16,000 jobs lost in 2016. But that doesn’t mean that manufacturing is in good shape. Total manufacturing employment is still down by more than 1M workers compared to 2007.
After years of wage stagnation, we are finally seeing rising wages.
Wages did grow from 2014 through the third quarter of 2017, but the rate of growth has slowed and in Q4 wage growth actually declined (from $353/wk to $345/wk) So why didn’t he mention that?
African American unemployment stands at the lowest rate ever recorded, and Hispanic American unemployment has also reached the lowest levels in history.
During Trump’s campaign, he claimed that more than half of African American youth were unemployed. The real number was 19.2%. African American unemployment fell from a high of 16.8% in 2010 to 7.7% last January. Since then it has fallen to 6.8%. Why didn’t he just say that? It is still really good news, and given his past campaign exaggerations, would have indicted a new respect for the facts.
Unemployment claims have hit a 45-year low.
That statement was true on January 13th. Last week the number went up. That’s still a good number, but it is only a six week low, not a 45-year one. Why not simply say that they hit an 45-year low two weeks ago.
The stock market has smashed one record after another, gaining $8 trillion in value. That is great news for Americans’ 401(k), retirement, pension and college savings accounts.
Only about 50 percent of Americans own stocks directly or through retirement funds, according to a Gallup survey. And most of the value in stocks is held by the top 10 percent. And the bull market in the US is actually weaker than market gains in the rest of the world. So the truth is that the US markets are just part of a larger global trend, and if anything Trump has discouraged investment in US markets rather than encouraged it.
BTW, the markets fell more than 1% on Monday as money moved from stocks to bonds. This is generally an indication that at least some traders think that this market may be near its peak. Almost $360B is stock market wealth (using Trumps calculus) disappeared as a result.
Just as I promised the American people from this podium 11 months ago, we enacted the biggest tax cuts and reform in American history.
This claim is just wrong and has been widely debunked. Depending on how you count, it ranks 8th in terms of size. Both of Obama’s tax cuts were larger.
Our massive tax cuts provide tremendous relief for the middle class and small businesses
More wrong. This tax plan benefits large corporations and wealthy people. According to Moody’s, three-quarters of the $1.1T in individual cuts go to people earning more than $200K/year in taxable income. Those represent only 5% of all taxpayers. The same report warns that this plan will have negative consequences on federal and local government finances.
We slashed the business tax rate from 35 percent all the way down to 21 percent, so American companies can compete and win against anyone in the world. These changes alone are estimated to increase average family income by more than $4,000.
More voodoo math. As FactCheck.org points out, if every household averaged a $4,000 increase in income, that would add up to $500B/year. Corporate taxes collected last year only totaled $300B. Even if all corporate taxes were eliminated and all of that money flowed directly into individual income, it still couldn’t add up to the increase Trump claimed.
The real numbers, according to the Tax Policy Center, are closer to $1,610. That’s $135/mo. Most people are smart enough to realize that they are not the ones getting a big break.
Since we passed tax cuts, roughly 3 million workers have already gotten tax cut bonuses — many of them thousands of dollars per worker.
Less than 2.5% of the work force have received one-time bonuses. That’s why the remaining 97.5% know that this wasn’t a good deal for them.
Since we passed tax cuts … Apple has just announced it plans to invest a total of $350 billion in America, and hire another 20,000 workers.
Apple DID give workers bonuses because of the tax plan. They do plan to repatriate $38B in overseas profit as a result of the plan. They did not say that their $350B five-year investment plan was the result of the tax plan. The capital part of that plan seems in line with past levels of annual investment.
The foundation of REAL economic growth is productivity. Productivity requires a large percentage of the population to be employed in doing things that make money. It is very difficult to increase productivity when you have a large growing retirement population. The only way to do that is to add as many new workers through immigration as you have retiring. You can’t simultaneously support lowering immigration, increasing retirement, and have a high growth economy. Japan already proved that it can’t be done.
The other end of productivity is businesses investing in new plants, new technologies, etc. That’s how you increase productivity without adding new workers. That investment is also NOT currently happening because businesses are able to make money without making those investments.
Another gauge of a healthy economy is the saving rate. Savings rates go up when people have more disposable income. The rate of savings is going down, which suggests that households are strapped for cash or they are drunk on spending. Neither is good. The first suggests that the cost of living is rising more rapidly than wages. The second suggests that any boost that the economy may be getting from consumer spending is short lived.
Finally, the government has a role in economic development too. That’s to stimulate the growth of new emerging industries. Trump is failing there too. That’s because of the stake in the ground that Trump planted regarding coal. First he has failed to keep the promise that he made to coal workers. Second his wrongheaded tariffs on solar panels is costing jobs in a rapidly growing sector of the industry while failing to make any difference in the coal industry which is in decline.
The problem with short term incentives like tax breaks and repatriation is that they are candy rather than substance. Bringing $38B of profits back to this country from Apple will make it appear as if something got made in this country. Unless Apple invests that money in making more stuff in the United States than it may have otherwise made, it will not be reflected in any increase in either jobs or productivity. If Apple just uses the money to buy back their stock and increase their dividends, any economic boost will be short lived and perhaps make the next stock market correction that much more severe.
When the President bases policy on false beliefs, the country will pay the price.
Adding $1.5T in additional debt now is a REALLY bad idea according to the IMF.
The I.M.F. warned against assuming that the current economic cycle would go on indefinitely, however, particularly given the towering debt of the United States and other countries. By borrowing so much, the government can crowd out other investors and drive up interest rates. At the same time, giant deficits crank up pressure to cut government spending on health care and housing, policing and schools. With less money to go around, spending dries up and consumer demand — the economy’s primary engine — slows.
This was the SAME warning that Republicans used during the Recession. It turned out not to be true, because that’s when the government SHOULD be spending money to get the economy going again. That deficit spending worked. The economy recovered. And NOW is the time to increase taxes in order to make investments in the future industries that will support the next generation of businesses and employment. That’s because a growing economy can support a higher tax rate.
Cranking down on immigration at a time of low unemployment and baby boomer retirement is another REALLY bad idea.
A single immigrant can bring in unlimited numbers of distant relatives
This was Trump’s big lie from his speech. Politifact labeled is Mostly False.
We should be welcoming immigrants AND their families. New family formation is the bedrock of the consumer economy. Immigrants who bring in family members provide their own support system for those immigrants. That means they will have places to live, jobs, churches, mosques, and people like them who will help them make the peaceful transition to becoming citizens. This family process that includes a path to citizenship is why we don’t have the same problems with domestic terrorism that we’ve seen in England, Germany, and France. There is no good reason to scrape the family immigration system.
Trading citizenship for 1.8M Dreamers for cutting LEGAL immigration in half (from $2.1M to $1M) is a bad deal for the economy. Dreamers are already here and already have jobs. Reducing the ability for immigrants to bring in their family members will just reduce the number of legal immigrants. I have no problem making our immigration system more merit-based, but the number of legal immigrants should be set by the number of unfilled jobs in the economy. Right now that number is 6M. What is wrong with expanding the H1B program which is merit and employer based until the number of unfilled jobs is reduced?
The only reason we can’t do that is because Trump has told the country that immigrants are dangerous. He did that again last night. Canada on the other hand has built their economy on merit-based immigration and has already told the world that if the US doesn’t want you, you are welcome to come to Canada where their political culture realizes the economic value of skilled immigrant workers.
The REAL problem we are dealing with in this country is the disconnect between reality and fantasy.
Until we have a government willing to tell the truth, we are going to struggle for any sort of reliable and unified plan for growth and stability.