The Obama Economy

By Paul Sullivan and Dan Sullivan

On September 30th, millions of Americans sat down in their homes to watch Joe Biden and Donald Trump face off for the first time. Many of them were aghast at Trump’s whiny, petulant rants, and horrified by his constant slanders and lies. But there was one falsehood Donald Trump said that night that he has repeated so often, many Americans have simply accepted it as truth. But, as per usual with Trump, it is simply one in an all too long line of lies.

Around thirty minutes into the debate, Trump let loose with his favorite falsehood. “So we built the greatest economy in history, we closed it down because of the China plague,” he said. “. . . we closed it down, and now we’re reopening. And we’re doing record business.” He went on to rant about how “Democrat-run states” were purposely sabotaging their economies in order to hurt him politically, and claimed that, because of his tax cuts, “the economy boomed like it’s never boomed before.” And then he once again targeted his predecessor. “[The Obama Administration] had the slowest recovery since . . . 1929,” Trump said. He claimed that Biden’s economic plans would cause manufacturers to leave America for foriegn shores, as well as cause a massive economic collapse. It’s ironic that Trump has continued to disparage the Obama-Biden administration in this manner, seeing as they are the two people who deserve more credit than anybody else for the economy that he loves to talk about.

The Obama-Biden administration was handed a truly broken economy; when America’s 44th President took office in January of 2009, unemployment was at 8% and climbing. Obama and Biden wasted no time in passing the American Recovery and Reinvestment Act. This key legislation served as a much-needed shot in the arm for the American economy. Afterwards, the unemployment rate fell steadily, and the economy began to add roughly 200,000 jobs a month — a trend that continued into the Trump administration without change.

Until, of course, the Coronavirus pandemic.

When Trump signed the much-vaunted Tax Cuts and Jobs Act, he said it would be “the rocket fuel our economy needs to soar higher than ever before.” But, three years on, the law has not created the massive economic boom that Trump promised. In fact, the job growth rate has decreased during Trump’s tenure. The tax cuts did, however, allow Trump and his billionaire friends to pocket incredible amounts of cash while simultaneously exploding the deficit. And thanks to Trump’s disastrous handling of the coronavirus pandemic, the unemployment rate has skyrocketed, currently hovering at 9%. The rate of job growth has gone negative, and there are now fewer jobs in Trump’s economy than when he first took office — the first President in modern history with that distinction.

Figure 1: The Unemployment rate from 2009–2020. The date that Trump assumed office is marked by the yellow dot, and the date that the Tex Cuts and Jobs Act went into affect is marked by the red.

Figure 2: The rate at which jobs were added to the US economy from 2009 to 2020. Trump’s inauguration is marked by the yellow dot, and the Tax Cuts and Jobs act is marked by the red.

Unemployment, however, is not the only measure of economic health. Even more important, economists say, is the rate of Gross Domestic Product growth, which crashed in the wake of the Great Recession. However, after Obama stabilized the economy, his Presidency saw a GDP growth of around 2.31% each quarter. Even after blowing up the deficit with his tax cuts, Trump only managed to increase the average quarterly GDP growth by around .38%. And those meager gains have since been obliterated by Trump’s preventable pandemic.

Even Trump’s favorite measure of economic activity, the omnipresent stock market, shows that he has provided little if any benefit to the economy. It’s true that, for most of Trump’s tenure, stock prices went up. However, those stock prices increased at roughly the same rate at which they had already been increasing under President Obama. And there is little evidence that the tax cuts did anything to add to their value. In fact, NASDAQ composite’s growth rate actually slowed precipitously after the tax cuts, and stock prices have collapsed several times during Trump’s tenure.

Figure 3: Quarterly GDP growth, from 2006–2020.

Figure 5: The NASDAQ Composite. The red bar shows where the stock would be if it increased at the rate that it had been at from 2017–2018

Figure 4: The S&P 500 data, from 2011 to 2020. Note how it has climbed at more or less the same rate ever since then.

Another argument that Trump has levied is that the cost of keeping safe from coronavirus is not worth the potential economic damage. He has maintained that states must “reopen their economies” and end all lockdowns and social distancing guidelines. All serious experts, however, insist that the economy will not be able to recover until the virus rampaging through the country is finally brought under control. However, the battle against the virus is one that Trump is simply uninterested in waging, despite his self-declared status as a “wartime President.” At every turn, his administration has demonstrated astounding incompetence in fighting the pandemic, with the man in charge sticking his head in the sand, insisting that the coronavirus is a “hoax” that will simply “disappear.” This alone would be bad enough, but Trump has taken it a step further. Far from simply ignoring the pandemic, the Trump administration has actively opposed measures that would help to control it. The White House has repeatedly refused to expand coronavirus testing, which is absolutely necessary if we are to have any hope of containing the pandemic. The administration has also repeatedly opposed a stimulus package that would help to ease the economic pain caused by the pandemic. The President himself has frequently mocked mask-wearing and social distancing — measures which could help to slow the spread of the pandemic. The White House has instead decided to pursue a strategy of “herd immunity,” — a process that would kill at least two milllion Americans.

And while the Trump administration twiddles its thumbs, the American people suffer. The restaurant industry is now on the verge of collapse, as all their patrons are too scared of COVID to risk dining out. Construction workers have found themselves out of a job as demand for new projects has evaporated. And hotel owners have seen their revenues decline, with potential travelers refusing to leave their homes for fear of the virus. None of this will get any better until the virus is brought to heel, and even when that happens, reviving the American economy will be a task of mammoth proportions. And it will require leadership that Trump is utterly incapable of providing.

Fortunately, one of the men who actually built the economy that Trump loves to boast about is running for President right now, and his name is Joe Biden. In the aftermath of the 2008 financial crisis, he worked in lockstep with Barack Obama to revive a failing economy, rescue the American auto industry and save millions of Americans from unemployment and bankruptcy. He’ll do the same for the thirty million Americans who have seen their livelihoods destroyed by Covid. Cleaning up Trump’s mess won’t be easy, but Joe is more than up to the task. He’s got a plan to build back better, and bring the American economy back from the brink. He’s got a plan to help contain the pandemic and finally stop this bleeding. So if Trump wants to talk about how great the economy was before Covid hit, he’s more than welcome to do so — he should just be honest about who really built it.