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Mon Oct 26, 2020, 08:32 AM

Trump's mythical economic success and the end of supply-side tax cuts

Opinion by Jennifer Rubin

President Trump’s argument for reelection boils down to this: “I kept the economy humming before I wrecked it, so let me try again.” Voters should understand this is false. More important, Republicans should understand their economic philosophy has reached a dead end.

Steven Rattner, former treasury official in the Obama administration, reminds us in an op-ed for the New York Times: “For the first three years of his presidency, his economy amounted to nothing more than a continuation of the recovery engineered by President Barack Obama. Job growth, for example, was faster during Mr. Obama’s last three years than during the first three years of Mr. Trump’s.” It was much the same story on wages, if one looks at “worker average hourly earnings, year-over-year percent change during Mr. Obama’s last 36 months and Mr. Trump’s first 36 months in office.”

Trump promised up to 6 percent growth as a result of the tax cuts, but that never appeared. Instead, Rattner reports, “At the end of December, Bloomberg Economics estimated that the trade war would cost the U.S. economy around $316 billion by the end of 2020.”

Republicans’ singular focus on tax cuts as the sole engine of growth and jobs needs to be reexamined. Obama’s 2013 tax hike, which raised the top marginal tax rate to 39.6 percent and increased the long-term capital gains rate for wealthy individuals, did not slow the economy. In fact, the Associated Press reported in 2016 that “employers added 5.8 million jobs in 2014 and 2015 — the strongest two-year growth since the late 1990s.” Those two years saw economic growth of 2.45 percent and 2.88 percent, respectively. The growth rate following Trump’s 2017 tax cut, by comparison, was 3.18 percent in 2018 and 2.33 percent in 2019.


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