President Donald Trump
Nicholas Kamm | AFP | Getty Images
The White House issued a vigorous defense of the Trump administration’s economic agenda on Thursday, claiming credit for changing the trajectory of the nation’s record expansion — while taking aim at the Obama administration’s record.
In its annual report to Congress, the White House highlighted GDP growth that has outpaced expectations and a jobless rate that has hit historic lows. The administration also pointed to gains in wages for low-skilled and minority workers as signs of the broad reach of the recovery.
The strong economy is likely to remain one of the dominant messages of President Donald Trump’s reelection campaign. According to the latest NBC News/Wall Street Journal poll, 53% of Americans approve of his handling of the economy, the highest rating he has received in the survey so far. And in its report, the White House repeatedly compares the economy’s performance under Trump to that of President Barack Obama.
“Three years into the Trump administration, the U.S. economy continues to outperform pre-2016 election expectations and also reverses or improves trends compared to the prior expansion after the Great Recession,” said Tomas Philipson, acting chairman of the White House Council of Economic Advisors.
The report amounts to an official version of the public spat between the two presidents that played out on Twitter earlier this week. To mark the anniversary of the roughly $800 billion stimulus package that he signed during the Great Recession, Obama tweeted that the legislation was instrumental in “paving the way for more than a decade of economic growth and the longest streak of job creation in American history.”
By the end of the day, Trump had fired back:
“Did you hear the latest con job?” he tweeted. “President Obama is now trying to take credit for the Economic Boom taking place under the Trump Administration. He had the WEAKEST recovery since the Great Depression, despite Zero Fed Rate & MASSIVE quantitative easing.”
In its report, the White House forecast that the economy would grow at an average of 3% over the next decade if all of its proposals are enacted, including a major infrastructure investment and another round of tax cuts. The report also estimates that gains in labor productivity will jump from about 1.4% to an average of 2.6%, well above the average during the expansion since the Great Recession.
The White House said one factor driving productivity growth over the long term is the 2017 tax reform act that reduced the corporate tax rate from 35% to 21%. Another key component is the administration’s rollback of regulations, from the individual mandate in the Affordable Care Act to changes to the federal acquisitions process.
“The deregulatory mechanism is how we have thought about productivity gains being achieved,” Philipson said. “Currently, they have not fully kicked in yet, most of them, so they could have potential future effects.”
The White House analyzed 20 major regulatory changes over the past three years and estimated they will boost average household income by 1.3%, or $1,900, over the course of three to five years. A freeze on additional regulations was forecast to bump incomes up another 0.8%, or $1,200.
The report outlines “idiosyncratic shocks” as the main risks to the administration’s rosy outlook. The White House pointed to production cuts at Boeing as one example, estimating that the halt in production of the 737 Max could reduce the rate of GDP growth in the first quarter by 0.5%. The report also highlights the government shutdown early last year and the layoffs at General Motors as drags on the economy.
The coronavirus outbreak was not covered in the report, and Philipson acknowledged it has created uncertainty for businesses. Still, he said he is not yet concerned.
“In terms of the public health impact, the economy is very resilient,” he said.
Thursday’s report also makes little mention of the nation’s trillion-dollar deficit or ballooning debt. But earlier this month, the White House unveiled a budget that relied on its strong economic projections and sweeping changes to social safety net programs to balance its budget over 15 years.
“Economic growth is critical for improving our fiscal situation,” Michael A. Peterson, chief executive of the Peter G. Peterson Foundation, said in a statement at the time. “But the irony is that the longer we wait to deal with our debt problem, the worse our economy will be.”