Opinion

Fixing the Economy’s Problems Also Fixes Trump’s

J.T. Young Former Treasury Department and OMB Official

Few incoming presidents have needed a strong economy as much as Trump does. Trump took office lacking an overwhelming mandate or high public favorability. His good news is that no issue buoys a president like a strong economy and he is well-positioned for one.

Though in office just two weeks, Trump celebrated January’s strong 227,000 jobs creation as evidence of his administration’s early economic success. It is not surprising: Trump needs a strong economy to offset political liabilities.

Trump did not take office with a strong electoral mandate. Although he won the electoral vote handily, he lost the popular vote. He also brought high unfavorability ratings to the White House. After just two weeks in office, Real Clear Politics’ February 8th average of national polls show he has a negative approval to disapproval rating — 44.4% to 49.6% — high for a president just entering office.

Trump encounters the general problem all incoming presidents confront: A rapid rise in public expectations. During the election, Americans judge the winning candidate versus a weaker opponent. Once in office, the standard grows dramatically: the president is now compared to past presidents and Americans’ lofty future expectations.

In addition to the general expectation problem all incoming presidents face, Trump faces his own particular ones. Trump’s aggressive style, already well reflected in his early agenda, promise to continue alienating a significant portion of Americans. And a critical mainstream media will only stoke that alienation.

In short, while good enough to win the election, Trump needs to bolster his standing if he is to successfully govern. This is why he needs a strong economy even more than most.

No domestic issue bolsters a president like a strong economy. Only the ability to take ownership of peace beats it — and not for long, as George HW Bush discovered when he lost reelection in 1992. The economy is America’s overarching domestic issue. Winners and losers exist in other issues, but virtually everyone wins in a strong economy and loses in a weak one.

Trump’s good news is the pieces are in place for his economic success.

First, Obama left eight years’ worth of weak economy. The final quarter of his presidency closed with a whimper, as real GDP grew just 1.9%, and 2016’s annual rate was only 1.6%. As low as these 2016 figures are, both are higher than the Obama presidency’s average annual growth rate of only 1.5% — just under half America’s 3.1% average annual real GDP growth rate from 1946-2008.

Americans may not know these numbers, but know all too well their effect. According to CNN November election exit polling, 62% said it was poor (31% said it was good), and these roughly two-thirds of voters went 62% for Trump.

Trump therefore inherited an economy that Americans by 2-1 acknowledge underperforming. And he earned a mandate to fix it from those who say it is broken.

Further, Trump has the tools at hand to fix it. Obama left many economic positives undone.

America’s tax code desperately needs reform and its taxes lowered — both would be big economy boosters.

Obama also grew the regulatory burden. Regulations are simply taxes by another name, so reducing them also increases the economy.

There are also economic growth projects waiting to lift off — particularly in the energy area — and take the economy with them.

Trump has already come out of the gate with quick action against excessive federal regulations and approving the two stalled pipelines, while tax reform appears high on his and Congress’ to-do list.

Without question these and other initiatives can help “make America’s economy great again.” They can also boost Trump to a political place he has never held.

An example of what economic recovery could do for Trump comes from Bill Clinton.

Clinton took office with even less political capital than Trump. Benefiting from Perot siphoning off Bush’s support, Bill’s 1992 popular vote percentage was further from Trump’s, than Trump’s was from Hillary’s last year.

Entering office dogged by scandal, Bill proceeded to make himself more unpopular with higher taxes and his failed health care overhaul and culminated by losing Congress in 1994’s midterm Republican landslide.

However in 1994’s political disaster, Bill Clinton received his economic salvation. Pushed to the brink by Republicans, he acquiesced in cutting federal spending and “governing small.” Doing good on one hand and no harm on the other, the economy boomed, averaging over 4% real growth over his last 6 years.

Without ever winning a popular vote majority, Bill Clinton went on to survive all manner of political tribulations, six years’ of Congressional opposition, and an absence of accomplishments most Americans applauded. He did so on the strength of the economy’s performance.

With more political capital than Bill Clinton had, the tools at hand to fix eight weak years and a willingness to do so, Trump is in position to win the economy just like he won November. In turn the economy could lift Trump from political upset to political reset.

The author served in the Treasury Department and the Office of Management and Budget from 2001 to 2004 and as a Congressional staff member from 1987 to 2000.