Trump is trying to fend off impeachment by saying he's built the 'greatest economy' in US history. But the facts paint a very different picture, top economists say.
- As Trump defends himself against the impeachment proceedings in the House, he's fallen back on a familiar line of attack against Democrats: The economy is the best it's ever been, so impeach that.
- The Trump economy so far has indeed continued on a steady upward trajectory on many fronts, including on wage gains and for reaching the lowest unemployment rate in nearly a half-century.
- But to call it "the greatest in history" is far off the mark, according to economists.
Old habits die hard for President Donald Trump.
As he defends himself against the impeachment proceedings in the House over his effort to pressure Ukraine into investigaing a political rival, Trump has fallen back on a familiar line of attack against Democrats: The economy is the best its ever been, so impeach that.
On late Wednesday evening, Trump went to Twitter to express disgust at the Democrats spearheading the impeachment inquiry — and touted his economic record with his characteristic sense of hyperbole.
"Impeached for what, having created the greatest Economy in the history of our Country, building our strongest ever Military, Cutting taxes too much?" Trump tweeted.
He's repeated the same defense over the past year:
- "Do you think it was luck that got us to the best Stock Market and Economy in our history. It wasn't!" Trump tweeted on September 26.
- "How do you impeach a President who has helped create perhaps the greatest economy in the history of our Country?" Trump tweeted on September 13.
- "We have the greatest economy that we've ever had," Trump said in a Fox News interview in October 2018.
The Trump economy so far has steadily strengthened on many fronts, including wage gains and for garnering the lowest unemployment rate in nearly a half-century. But Trump, like presidents before him, hardly exercise full power over steering the economy. "At best," Washington Post columnist Catherine Rampbell wrote, they can usually affect things on the margins, in the short run."
But to call this economy "the greatest in history" is far off the mark, economists say.
The economy just isn't as good as Trump says
Martin Baily, a senior fellow at the Brookings Institution who was a top economic adviser to the Clinton administration, disagreed with Trump's bold claim.
"The economy in the late 1990s was in better shape," Baily told Business Insider. "Growth was faster, productivity growth was much faster. There was similarly low inflation and there was a broader improvement in living standards at the time."
Indeed, the Clinton's economic policies helped usher in a decade of prosperity through the 1990s, with unemployment nearly halved to four percent when he left office and he presided over a historic rate of job creation. He also left his successor George W. Bush a budget surplus, the last time the federal government had one.
Baily, Clinton's former chair of the Council of Economic Advisers, gave Trump's handling of the economy a C+.
"The story on the economy right now is a mixed one. There's no question unemployment is lower now than even in the late 1990s and inflation is low," Baily says. He also added he didn't "want to downplay" that more people are entering the workforce and getting jobs after a difficult economic stretch.
However, Baily says he's "very worried" about the budget deficit, which the Congressional Budget Office projected will reach $984 billion for the 2019 fiscal year. "Nobody seems to care anymore," he said, adding that spending on entitlement programs like Medicare and Social Security are soaring.
Another economist also disagreed with Trump's view of the economy, though he had a slightly more optimistic view on it. Douglas Holtz-Eakin, the president of the American Action Forum and top economic adviser to the Bush administration, said he believed it could be better.
"There's nothing that says this economy is a disaster," Holtz-Eakin told Business Insider. "But I would be measured in my assessment of it."
Holtz-Eakin, who was also CBO director from 2003 to 2005, said there were indeed positive factors swinging in Trump's favor.
"I would point to the low unemployment rate and productivity growth which has rebounded," he said, pointing out both as "fundamental to long-term success" in his view. He gave Trump a B- so far on the economy.
Holtz-Eakin criticized Trump's trade wars, calling it "a self-inflicted wound." The burden of the trade war has fallen on American consumers — which power 70% of the economy with their spending — as average families pay over $460 each year — and that figure could still double if all of the proposed tariffs go into effect by the end of 2019.
Still, Holtz-Eakin says that Trump has "convinced" himself he can sell a message of a strong economy even if the numbers paint a different picture.
"I think he's quite convinced he can successfully sell this is the greatest economy even if the numbers don't match that," Holtz-Eakin said, "The economy that matters is the one that's six to nine months out of the election, so next spring is the key."
Depending on the direction the economy goes, it could also be a factor in Trump's impeachment battle, according to Baily. He says the robust economy in the late 1990s helped Clinton "a great deal," but he doesn't believe it'll provide a similar level of protection for Trump.
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