The argument that it's Obama's economy is a fairly common one from the Left. Claims made are very simple: they point to the fact that the economy began crashing under Bush, then point out it stabilized under Obama, and finally started improving shortly after Obama left office. The oft cited reasoning falls on one statistic, though, and that's how the unemployment rate dropped.
Well, I have bad news for you, Leftists… The surge of economic growth isn't Obama's doing. But to prove this, one must look at a much broader picture than "unemployment dropped, so Obama good". Sadly, that's a difficult thing for the Left to accomplish; what with not being able to see past their noses.
A strong economy arrives of many things, and can also only be proven by looking at multiple indicators. The following list can help break things down:
1. Unemployment rate. A strong economy will naturally carry a relatively low unemployment rate because businesses can afford to higher due to improved revenues. This cannot, however, be a sole measure because after an economy crashes and many lose their jobs, existing businesses have less competition and can grow; though slowly. The businesses stabilize they own revenues, and are able to change operations in order to be able to take on employees. Now the mass that lost jobs are able to go work for those companies who survived. So, again, this cannot be a lone factor in determining a strong economy.
2. Tax revenue. Taxes are paid when money is moving. In a slow economy, tax revenues are low. Why? Less money is moving. Fewer personal goods are purchased, which means business revenues drop, which means corporate spending drops, which means pay becomes stagnant, and nothing grows, which means tax revenue flat-lines. The flat-line tends to be the result of over-regulation. Things like ObamaCare (requiring individuals to have insurance under penalty of fine) hurts individuals, starting the cycle above. Drop those types regulations and suddenly personal finances looks up, which actually reverses the problem formerly presented.
3. Gross Domestic Product (GDP). Here we have one of the truest indicators of a thriving economy. US Treasury Secretary Jack Lew was very wrong when indicating that 2% GDP was the new normal. But where did they go wrong? They didn't take into account that rolling back over-regulation and cutting taxes could drive the GDP up. And more than double at this point. In the grand scheme… 2%-ish to over 4% is a HUGE improvement.
And thus we establish the measurements required to determine a solid, growing economy. Obama had one of three of those measurements during his time. Even the benefit of that measurement (unemployment) was thwarted by slow wage increases while simultaneously lowering disposable income. ObamaCare is just a single example. There are many regulations that can be named. Forbes magazine wrote a good article on the subject back in 2013: https://www.forbes.com/sites/waynecrews/2013/02/06/small-business-regulations-surge-under-obama/#553f5f50147d
So now we ask "what did Trump do that was so great for the economy, then?". I'm happy you should inquire!!
1. Eliminating the individual insurance mandate allowed for people to recover some disposable income. That inherently allowed them to spend more money within the economy. A small step, but remember it takes many small steps to get where we are.
2. Lowered taxes, most specifically on low and middle income families. These are the bulk of our spenders. Spending drives the economy. It gave individuals even more disposable income. Along with personal taxes being lowered, corporate taxes were decreased. This is important for a few reasons: it freed up money to finally give real wage increases, it made it once again reasonable for start-ups to happen, and it improved corporate spending. The improved disposable personal income is a small step. More spending, higher wages, and more employees generates tax revenue. The improved wages further improved disposable income, making another small step. Start-ups moving again is yet another small step. Improved corporate spending is actually a pretty long step.
3. A number of regulations covering a slew of different industries allowed for some red tape to be cut. Cutting red tape for businesses frees up resources for more available capital. That frees up corporate spending, more hiring, and more wage increases. As we've seen, those types of things create their own small steps.
4. This formula has now, proven by actual, tangible numbers, improved GDP because more money is on the move throughout the economy.
It is patently NOT Obama's economy.
-Mike H
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