Obama's economist grasps at straws trying to devalue Trump's impact
BY LIZ PEEK, OPINION CONTRIBUTOR — 0
Larry Summers is grumpy that President Trump is taking credit for the booming economy. Wait until the former mastermind of President Obama’s economic strategy sees the most recent IBD/TIPP Poll. That survey, according to Investor’s Business Daily, shows Americans giving President Trump an “A” for his handling of the economy.
The poll shows their “Economic Optimism” index climbing in August to 58, the second-highest mark since January 2004.
In addition, they note other indicators that the nation’s mood has brightened:
- In August, respondents rated their “Quality of Life” at 64.2; the previous all-time high was 63.1, recorded in January 2004.The average under President Obama was 53.7.
- Similarly, the latest reading on “Direction of the Country” hit 50.3, up 13 percent from the prior month, and the highest recorded since 2005. That compares to a 17-year average of 41.6 and an average of 37 during President Obama’s time in office.
- The “Financial Stress Index,” which has averaged 59.4 since it was created in 2007, plunged in August to 47.4, its lowest level ever. As IBD explained, “People are feeling more secure in their finances than they have at least since the early 2000s.”
Is it coincidence that these improved ratings have tracked the acceleration in the economy and improving jobs market? Of course not. A recent Rasmussen poll showed that 50 percent of likely voters say Trump deserves plaudits for the improving economy, while only 40 percent credit President Obama.
Even in a Quinnipiac poll taken at the height of the controversy over Trump’s Helsinki summit, when the president came under extreme criticism, respondents by a 49-47 margin were positive on his handling of the economy.
Larry Summers not only disagrees that President Trump has anything to do with our improving economy, he is also reluctant to bury his gloomy “secular stagnation” theory that income and job growth will forever be severely restricted.
He is, of course, in the position of having to explain why the Obama administration, in which he served as director of the National Economic Council, failed to excite higher investment and spending and instead presided over the slowest post-recession growth in modern times.
His arguments are, befitting a distinguished economist, convoluted. He wrote in a recent Financial Times op-ed that “if unemployment were at its long-term level of 5.5%, instead of its current 3.9%, Mr. Trump’s approval rate would fall lower…” Here’s the thing, Mr. Summers: It’s not at 5.5 percent.
He also says that the “acceleration of growth…is well within the normal range of growth forecast errors.” He notes that before the election the estimate for 2018 growth was 2.1 percent. “The consensus forecast of 2.8% for 2018 [does] not represent a statistically significant fluctuation from the mean.” Huh?
It’s been a while since I took statistics, but I’m pretty sure that 2.8 percent is a whale of an increase over 2.1 percent, and without a doubt a significant difference.
The only substantial critique comes from his observation that growth outside the U.S. has outperformed expectations more than here at home and that we benefited from the global increase. That was true last year when the EU, Japan and China all did better than expected; it is not true this year, an inconvenient fact he buries by lumping the two years together.
In fact, this year, the U.S. is the world’s star economy, benefiting from the GOP tax cuts and lighter regulation. That reality bolsters Trump’s claim of credit; other countries have not injected their economies with any optimism-producing tax or rule changes, and their performance has suffered in comparison.
France, under newly-elected Macron, started out attempting to loosen its archaic work rules, for instance, and the U.K. hoped to move along the same lines after Brexit, but neither country has managed to follow through.
But the ultimate argument in favor of President Trump’s impact on the economy is that Americans greeted his election with a surge of optimism the likes of which we haven’t seen in decades.
Summers would not understand that, because like most liberals, he is probably offended by Trump’s disregard for established norms of behavior and his controversial embrace of lower taxes and lighter regulation.
That optimism is real, and powerful — something Obama never appreciated. When he told business owners, “You didn’t build that,” or when he ignored and ultimately shut down the President’s Council on Jobs and Competitiveness, a group offering suggestions on how to create jobs, he displayed a very real antipathy toward private enterprise and actual job creators.
In 2010, the Washington Post reported that “the chairman of the Business Roundtable, an association of top corporate executives that has been President Obama’s closest ally in the business community, accused the president and Democratic lawmakers Tuesday of creating an 'increasingly hostile environment for investment and job creation.'”
They quoted Ivan G. Seidenberg, then CEO of Verizon Communications, blasting Democrats for pursuing higher taxes and costly regulations that “threaten to dampen economic growth and "harm our ability...to grow private-sector jobs in the U.S."
Seidenberg told the Economic Club, "By reaching into virtually every sector of economic life, government is injecting uncertainty into the marketplace and making it harder to raise capital and create new businesses."
Obama and Larry Summers never understood why their economy was stuck in the mud and what was needed to turn it around. They still don’t. President Trump, as a businessman, gets it. The results speak for themselves.
Liz Peek is a former partner of major bracket Wall Street firm Wertheim & Company. For 15 years, she has been a columnist for The Fiscal Times, Fox News, the New York Sun and numerous other organizations.
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