Former President Obama has been claiming credit for the Trump economic boom, saying he paved the way for President Trump’s remarkable success. Not quite.
By definition, when economic numbers are unprecedented going back as far as records have been kept or exceed results for the past several decades, that means they have surpassed not only Mr. Obama’s two terms in office but the results of all the modern presidents.
To be sure, the economy recovered from a deep recession after Mr. Obama took office, but it was the slowest recovery since the Great Depression. Rather than paving the way for the Trump economic boom, the growth in quarterly gross domestic product actually slowed near the end of the Obama presidency.
In fact, Mr. Obama is the only president since records were first kept under the administration of Herbert Hoover to fail to achieve annual GDP growth of 3 percent or more.
Thus, the fact that we now have the lowest unemployment level since 1969, the lowest black unemployment since 1972 when records were first kept and the highest consumer confidence level in 18 years is entirely attributable to Mr. Trump and his policies. During the eight years of Mr. Obama’s presidency, the average annual growth in the economy was a pathetic 1.9 percent, meaning millions could not find jobs and may have lost their homes or life savings as a result.
Mr. Obama’s performance puts him last among 12 presidents going back to World War II and Harry Truman. Measured by net worth, the economic chasm between black and Hispanic families and their white counterparts widened in the final three years of Mr. Obama’s presidency.
It’s not hard to see why. If you watched any of the financial television channels during the Obama presidency, you saw hundreds of CEOs of companies large and small complain that because of the Obama administration’s crusade to impose more regulations on American business, their costs were increasing, and they were afraid to expand and hire more workers.
At the same time, Mr. Obama’s demonization of business and his constant swipes at entrepreneurship imposed a psychological restraint on American capitalism. During a talk in Roanoke, Virginia, Mr. Obama diminished successful people by saying no one gets there on his own. “If you’ve got a business, you didn’t build that. Somebody else made that happen,” Mr. Obama said. Mr. Obama cited the obvious fact that everyone needs teachers, roads, and bridges. But to detract from the achievement of any successful person — whether a student graduating from college or a Thomas Alva Edison, Steve Jobs or Bill Gates — is to attack the very essence of the free enterprise system and what makes America a magnet for immigrants from all over the world.
Behind Mr. Obama’s failure on the economic front was a blind spot to understanding that people respond to incentives and disincentives. Funneling taxpayers’ money through the federal government has no multiplier effect and does not give businesses incentives to expand and hire more people. Because capitalism responds to consumer needs, it is actually the most altruistic economic system.
Looking at Mr. Obama’s approach, I am reminded of sitting in the dining room at the National Hotel in Moscow when writing my book “Moscow Station” during the Cold War. Since they were government employees, the waiters milled around and chatted in groups, ignoring my wife Pam and me. Why should they wait on us? They were paid by the Soviet Union regardless and got no tips. Similarly, their bosses had the same lack of incentive to properly supervise them.
Instead of demonizing business, in his first year as president, Mr. Trump touted the accomplishments of American capitalism and decapitated government regulations that were strangling large and small companies. In doing so, he achieved even more than his tax cuts to supercharge the American economy and give businesses and the stock market a psychological boost.
On the morning of Mr. Trump’s election victory, Paul Krugman of The New York Times predicted that the stock market would crash that day and “never” recover. Indeed, Mr. Krugman wrote that with Mr. Trump in the White House ” we are very probably looking at a global recession, with no end in sight.” The same day that his story appeared, instead of collapsing, the Dow Jones Industrial Average was up 256 points and surged to an all-time high shortly before the closing bell, the strongest election-day rally in 24 years. The Dow is now up about 40 percent since Mr. Trump’s election.
Instead of leading from behind, the famous characterization of President Obama’s approach by one of his aides, Mr. Trump leads from strength. Instead of knocking America, as Mr. Obama did when he apologized for American “arrogance,” Mr. Trump is a cheerleader for the United States.
Whether almost totally defeating ISIS, making progress on denuclearization of North Korea, or achieving unprecedented economic success, any one of Mr. Trump’s accomplishments is remarkable. As my home contractor says, “I don’t care what Trump says; I care about what he does.” Based on results, like President Reagan, who was also reviled and mocked by the press, Mr. Trump will eventually be seen as one of America’s greatest presidents.
• Ronald Kessler, a former Washington Post and Wall Street Journal investigative reporter, is the author of “The Trump White House: Changing the Rules of the Game” (Crown Forum).