Harris Has the Facts to Refute Trump’s Lies About the Economy
With Kamala Harris’ fast-approaching nomination, her campaign has an opening to call out Donald Trump’s lies about his economic record and reset the economic narrative based on facts. Trump regularly claims that “we had the greatest economy in history” under his leadership. In late June, Trump declared that he had left Biden an economy that “was so good, all he had to do is leave it alone … [instead] he destroyed it.”
Those statements bear no resemblance to reality. But like other demagogues, Trump believes that repeating his lies long enough will convince those who listen to him that he speaks the truth. The truth is that the Biden-Harris administration improved people’s economic lives, but Trump didn’t. That’s her narrative.
Biden and Harris enacted fundamental reforms in areas that matter economically, while Trump only blustered and lied. Better infrastructure raises productivity across most of the economy, and Trump promised significant infrastructure upgrades. But he never proposed any actual improvements. Biden and Harris did, and their administration passed the Infrastructure Investment and Jobs Act with its multi-year public investments in the electric grid, high-speed internet, electric charging stations, clean water, public transit, passenger rail, airports, ports, roads, and bridges.
Next, the Biden-Harris CHIPS and Science Act provides large, multi-year investments and tax credits for semiconductor manufacturing and R&D, wireless supply chains, and STEM education and training. Trump proposed and passed nothing, and his latest plan to make America competitive in semiconductors is to punish the leading foreign producer of advanced chips, Taiwan, by demanding that it pay more for U.S. defense support.
With climate change accelerating, steps to promote the country’s transition to clean energy are an economic imperative. So, the administration enacted the Inflation Reduction Act, which now provides multi-year public investments, loans, and tax credits in clean energy manufacturing, vehicles, fuels, and innovation. Trump’s response to the economic imperative linked to climate change is to deny the science and blame China for perpetrating a “hoax.”
Speaking about these achievements is a good start for resetting the economic narrative. It also requires repeating irrefutable facts to show how much better the economy has been since Biden and Harris took charge.
Growth is the foundation of every president’s economic record, and the Bureau of Economic Analysis has the facts. Under Trump, real GDP grew at an average rate of 1.5 percent annually, the slowest average growth rate for any president since World War II. Compare that to the growth under Biden and Harris, when the economy expanded at an average annual rate of 3.4 percent, or nearly three times greater than Trump.
The MAGA chorus will complain that Trump deserves a bye for the 2020 pandemic year. If we humor them, the facts still show that from 2017 to 2019, the economy grew an average of 2.7 percent per year—lagging badly behind Biden and Harris. The 2.7 percent average growth under Trump also was much slower than the average under nearly all of his post-war predecessors, including Bill Clinton (3.9 percent), Ronald Reagan (3.5 percent), Jimmy Carter (3.3 percent), Richard Nixon (2.8 percent), Lyndon Johnson (5.4 percent), John Kennedy (4.4 percent), Dwight Eisenhower (3.1 percent) and Harry Truman (3.8 percent). The truth is that Trump’s record on growth is pitiful.
Trump also says his 2017 tax cuts ignited an investment boom. Given his business history, it’s no surprise he’s lying here, too. The facts for Harris’s narrative are that U.S. businesses increased investment spending at a moderate annual rate of 2.6 percent under Trump from 2018 to 2020—barely half the much more robust 5.1 percent annual gains in fixed business investment under Biden and Harris.
Trump says he’s excellent for entrepreneurism, and that’s also a lie. Here, the Census Bureau has the facts: While Trump was president, entrepreneurs established an average of 304,050 new businesses per month. Under Biden and Haris, new business starts have averaged 442,560 per month, 45 percent more per month than under Trump.
Job creation is more fodder for the new economic narrative. Trump has claimed that “we had the best jobs numbers ever.” That’s an especially shameless canard since he was the only president since Herbert Hoover to leave office with lower employment than when he began, by a margin of 3.1 million jobs.
Trump’s followers will say again that 2020 shouldn’t count. Let’s humor them again and set aside 2020. From 2017 through 2019, total employment increased by 6.2 million, for an average annual gain of 1.4 percent. That’s a lot better than losing 3.1 million jobs. It’s also a lot worse than the Biden-Harris record. Since they took office, employment has increased by a record-setting 15.7 million jobs, for average annual gains of 2.9 percent.
That leaves inflation, where Trump comes out ahead. But low inflation is the consolation prize for slow growth. So, the modest growth during Trump’s first three years produced inflation averaging just 2.1 percent annually, followed by the deep 2020 recession that brought on 1.3 percent deflation.
All of that changed in 2021. Growth took off and collided with the disruptions from the pandemic in the worldwide production of goods and the parts that go into many goods and services. The result was shortages just as demand took off, so prices here and in other advanced countries spiked. Federal Reserve economists have traced 60 percent of the inflation to those disruptions, and much of the rest was energy, as OPEC curtailed oil production and Vladimir Putin’s invasion of Ukraine disrupted energy flows to Western Europe. The result was that inflation spiked across most of the world.
We’ve also seen that the policies of the Biden-Harris administration and strong consumer resistance to hiked up prices have beaten inflation. Inflation peaked two years ago at 9 percent. Fast-forward to the past six months, the rate averaged 3.2 percent, and since April, U.S. prices have not risen at all.
It’s worth noting that we also managed inflation better than other advanced countries. In Great Britain, inflation peaked at more than 11 percent and then fell sharply. But last year, when the rate averaged 4.2 percent here, it was 6.9 percent in Britain. Britain’s economy has stumbled badly over the past 12 months, bringing down its inflation rate to 3.5 percent. Here, inflation is lower even as the economy continues to grow, most recently by 2.8 percent in the second quarter.
Candidate Harris has a compelling economic narrative based purely on the facts—about growth, business investment and creation, employment, and the measures that helped us get there—the bipartisan infrastructure and semiconductor acts and the Democratically passed Inflation Reduction Act. Yes, inflation hit the United States like other countries, and the Biden-Harris policies beat it.
And that’s the truth.
This essay was originally issued by Washington Monthly.