Editor’s Note: Congresswoman Carolyn B. Maloney is vice chair of the U.S. Congress Joint Economic Committee. The opinions expressed in this commentary are her own.
Every year, the public gets a window into the White House’s views of the economy when the administration publishes the Economic Report of the President. Typically, it is a dense but interesting read, offering a data-driven assessment of the economy, and highly anticipated by economists, policymakers and others who care about economic policy. However, the Trump administration’s 2019 report is a sharp departure from those of previous administrations.
This year’s report misconstrues well-established facts, cherry-picks data, relies on economic theories widely rejected by mainstream economists and entirely omits critical subjects. I correct the record in the Joint Economic Committee Democratic response to the report, which is mandated by law, and was released Thursday.
The report claims full credit for economic conditions that President Trump mostly inherited from President Obama. At the time of President Trump’s inauguration, the unemployment rate was 4.7% and trending down, while the economy had added jobs for 76 straight months. Moreover, the average monthly job growth during the last two years of the Obama administration was stronger than the first two years of the Trump administration. Even so, Trump implausibly has claimed that he has achieved an economic turnaround.
The Trump administration’s economic forecast is also extremely optimistic compared to those of respected nonpartisan sources like the Federal Reserve and the Congressional Budget Office. It’s The administration’s estimates of real GDP growth of 3% or greater each year through 2024 are 50% higher than the Federal Reserve’s and assume implausible legislative victories, such as the permanent extension of the personal income tax changes in the Tax Cuts and Jobs Act, in order to achieve its forecasts.
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The report exaggerates the impacts of the Republican tax cuts, which mainstream economists have characterized as a short-term sugar rush and an unnecessary stimulus of an already-hot economy. While private investment increased in 2018, much of the gains may have resulted from changes in oil prices. Even with the boost from oil prices, private investment grew more slowly in 2018 than in 2011 or 2012. And the $1.9 trillion cost of the tax cuts will weigh on the economy for years into the future.
There is only brief consideration in the report given to the economic status of Millennials, who now make up the largest generation in the workforce. It ignores their experience entering the job market and beginning their careers during and in the wake of the worst recession since the Great Depression. Many Millennials have depressed wages and more student debt, and fewer of them own homes than previous generations at the same stage of their lives.
In one of its most erroneous claims, the report declares that President Johnson’s War on Poverty “is largely over and has been a success” based on 1963 standards of material hardship. It uses an alternative measure of poverty to find that only 2.3% of Americans live in poverty, compared to the official poverty rate of 12.3%. This makes light of the daily challenges facing the nearly 40 million Americans who live in poverty and the millions more who move in and out of poverty during their lives.
With such an overly optimistic assessment of poverty, it is not surprising that the report says little about the critical issue of income and wealth inequality, which has widened dramatically over the past four decades. It also sidesteps issues of race, class, gender, education, age and geography.
Finally, the report almost entirely omits the subject of climate change, perhaps the greatest challenge facing the global economy in coming decades.
Rather than ignoring major challenges before us or claiming all is right with the economy, we should invest in our communities and our people.
Let’s start by rebuilding our broken infrastructure, expanding opportunity to the millions of Americans who still have not benefited from the recovery, reining in prescription drug prices, taking actions to reduce income and wealth inequality, making higher education more accessible and affordable and recognizing — at every level of the federal government — that climate change is a global threat that requires immediate and bold action.
It is an ambitious agenda. But, that is what the American people deserve and that’s what congressional Democrats are committed to delivering.
