Tale of the tax-cut tape: What did we get for $1.5 trillion?
On Friday, a lackluster employment report showed just 130,000 jobs produced in August. While unemployment stayed at 3.7%, other major danger signs were visible, partly brought on by President Trump’s trade war.
This isn’t what was promised two years ago when the president sold a $1.5 trillion tax cut as a magic elixir for the U.S. economy.
“The biggest winners will be the everyday American workers as jobs start pouring into our country, as companies start competing for American labor and as wages start going up at levels that you haven’t seen in many years,” Trump said Sept. 27, 2017. Two months later, days before signing the tax cut bill, he boasted, of GDP growth possibly hitting "4, 5, and maybe even 6%.”
Manufacturing increased by 3.8% in the 19 months before the tax cut, but by just 1.3% in that same period since. Indeed, the Purchasing Managers’ Index (PMI) slipped to 49.1% (below 50 signals a manufacturing contraction), part of a precipitous downward manufacturing trend since the start of the year.
A positive note: Average hourly earnings increased 5.2% post-cut versus 3.9% prior.
But aside from hitting 3.5% in the second quarter of 2018, overall economic growth has slowed to 2.9% for the year and has settled around the same 2.0% Trump decried in the Obama years.
Given that the annual deficit fell to $585 billion as Barack Obama was leaving office (after a post-Great Recession peak of $1.3 trillion), Americans can rightly ask if an economy now seemingly grinding to a halt was worth the $2.5 trillion Donald Trump has added to the debt since he came into office.