Chuck DeVore, Vice President of National Initiatives at the Texas Public Policy Foundation, just wrote a magnificent article about the differences between Trump’s and Obama’s economies in Forbes Magazine.
Chuck compares the last two years under Obama and the first two under Trump and explains that while both have enjoyed good economies, there are crucial differences.
Specifically, DeVore argues Trump did indeed find that “magic wand’ Obama said he would need to bring manufacturing jobs back before pointing our a few other critical differences.
From Forbes: Last Friday, the U.S. Bureau of Labor Statistics issued its February jobs report. Comparing the Trump administration’s first 26 months of employment data with the last 26 months under Obama is insightful.
Both periods are considered by most economists to be in the mature stage of the business cycle. In Obama’s case, slow economic growth, especially regarding sluggish manufacturing employment, was considered the “new normal.” The national economy grew by 1.6% in 2016, Obama’s last year.
From October 2014 to December 2016, private sector employment grew by 4.2% as the unemployment rate dipped to 4.7%. In the past 26 months, private employers have grown their payrolls by 4.0% as the job market has tightened considerably, with official unemployment dropping to 3.8%.
While overall employment numbers are comparable, the difference in manufacturing is profound. In the last 26 months of Obama’s presidency, manufacturing employment grew by 96,000 or 0.8%. In Trump’s first 26 months, manufacturers added 479,000 jobs, or 3.9%, 399% more jobs than Obama’s record.
Is it any wonder that President Obama derided then-candidate Trump for needing a “magic wand” to deliver on his manufacturing jobs promise?
On the other hand, federal, state and local government jobs, many of them creators of job-stifling red tape, grew by 1.7% in Obama’s last 26 months compared to 0.8% under Trump.
In fact, over the past 26 months, there were 168% more jobs in manufacturing created than in government, while during Obama’s last 26 months, there were 303% more government jobs created than in manufacturing. This was not sustainable. Government jobs don’t pay for themselves.
And here’s where President Trump’s pro-growth policies come into play.
The current stretch in increased manufacturing employment started in November, 2016—the month of Trump’s election. Employers, especially those faced with making long-term investments in physical plants and equipment, anticipated regulatory relief under Trump.
They got the relief they hoped for.
By October 2018, the Trump Administration cut 2.7 major regulations for every one added, greatly reducing regulatory cost and risk.
In addition, the tax cuts signed into law in December 2017 not only reduced corporate tax rates, encouraging investment, they also incentivized U.S.-based multinational corporations to bring home profits held overseas.
In the first nine months of 2019, these firms repatriated $571.3 billion—money needed for job-creating investment at home, but had been held in foreign countries because America had the highest corporate tax rate in the industrialized world.
Trump’s pro-growth policies appear to be all the magic the manufacturing sector needed