Trump, like most presidents, takes credit for American workers’ effort

In a time-honored American presidential tradition, President Trump effectively took credit for the successes created by America’s workers during last week’s State of the Union address. Citing statistics that coincide with his administration’s term in office, he made the same suggestion that politicians and their ardent supporters can usually be expected to make: That correlation implies causation.

Such claims should always be scrutinized, regardless of the politician’s party affiliation. As I’ve written before, when things are good, politicians always take credit, and when things are bad, they try to blame their predecessor.

The economy was already on its current upward track well before Trump entered office. For example, President Trump claimed that manufacturing was making a turnaround in the United States, but the truth is that he was late to that party. Total manufacturing employment has actually been steadily rising since early 2010.

Furthermore, Trump’s statement that America lost 60,000 factories under the previous two administrations and has gained 12,000 under his administration is an artful abuse of statistics. Those numbers refer to Bureau of Labor Statistics data on “manufacturing establishments,” not factories, and more than 80 percent have fewer than five workers. He also conveniently forgot to mention that the same statistic increased by 10,000 during President Obama’s last term.

It’s impossible to deny that the economy is going gangbusters — the addition of 225,000 payroll jobs last month is good evidence of that. I regularly report that the comprehensive jobless rate (a more holistic unemployment rate than the standard headline statistic) continues to set new record lows. But while presidents have massive political and economic power, they can’t make the economy turn on a dime.

The effect of new policies is generally seen in the long run, not next week. And in the rare circumstances when politicians force the economy to change quickly, the result is usually painful for those involved. Take California, where Assembly Bill 5’s reclassification of independent contractors to employees negatively affected thousands of livelihoods almost overnight.

The economy is a difficult horse to tame. Politicians looking to maximize economic development should give it free reign and let it show its unencumbered strength. That is, their best option most of the time is to simply get out of the way and let entrepreneurs experiment to find new and better ways to serve customers. Too many politicians instead try to direct the economy’s course to their own desired outcomes. More often than not, this leads to unexpected and unhappy consequences. The horse is hobbled, rather than running fast and free. 

President Trump lauded one of those programs in his address — the “Opportunity Zones” created by the Tax Cuts and Jobs Act. Every president seems to have his own version of this program; President Clinton had “Empowerment Zones,” Reagan had “Enterprise Zones,” Obama had “Promise Zones” and George W. Bush had his own “Opportunity Zones.”

All are justified on the argument that some areas need special help in furthering their economic development. But as Tad DeHaven and I recently wrote in The Hill, Trump’s Opportunity Zones are already suffering the same fate met by so many other well-intentioned programs: The rich and influential are directing the funding to benefit their own projects.

If the president wants to create as many new economic development opportunities as possible, rather than just providing an avenue for government-favored projects, he should acknowledge that the program is being twisted to serve special interests rather than the general welfare. Recognizing that there are already four separate bills before Congress to amend the program would have been a good start. That would have allowed the president to magnanimously reach across the aisle to join forces with Rep. Rashida Tlaib (D-Mich.), who rightly recognizes that there’s something fundamentally wrong with a government program dedicated to handing out privileges to the well-connected.

The president concluded his address by saying that the sun is still rising on America’s economy. That seems to be true, but he deserves only some – not all, or even most – of the credit. And our economic future would be even brighter if he worked to end the institutionalized inequity in his economic development programs.

Michael Farren is a research fellow with the Mercatus Center at George Mason University.