An Improving Economy, but not quite “Mission Accomplished”
Monday, 19 February 2019 10:30 AM
Keeping the economy as a top concern will benefit President Trump and Republicans in 2020
Among the few reasonable people left in Washington these days, I think many of them would still agree that the economy is better today than it was before President Trump took office. Irrespective of who and what policies they believe are responsible, there are undeniable metrics that substantiate this claim, such as the consecutive months of job creation, decreasing levels of unemployment and growth rates (GDP) of at least 3%. The data shows that these dynamics had been occurring under President Obama and have continued under President Trump. There are also some, like J.P. Morgan CEO Jamie Dimon, who say that the Tax Cuts and Job Act of 2017 along with historic regulatory rollbacks have accelerated economic growth and helped small businesses.
This progress is encouraging for investors, employers and everyday Americans and it is quite warranted for Trump to tout these achievements, just as prior presidents have done. However, Trump should be less hyperbolic and not declare victory yet.
In fact, many Americans do not share President Trump’s level of satisfaction or indicate that they have personally benefited from his policies. First off, some have said the stock market isn’t always the best indicator of the economy at large. Although a recent Gallup poll found that personal financial optimism is the highest it’s been in 20 years, another Gallup poll from a similar period found that most see the economy as slowing or declining. Yes, that same poll saw an improvement from 2012 in the number of Americans who said the economy was “growing” (34% to 41%) and a sharp decrease in those who said the economy was in a recession or depression (44% to 17%), but the sentiments are lukewarm rather than lopsided among the populace. Furthermore, in our post-election survey conducted on Election Day last November, just 21% of voters said their taxes went down as a result of President Trump and Congress’ tax cut plan. A similar 19% said their taxes actually went up and the plurality, 40%, said they remained the same. This gives some insights into why the benefits of the tax cuts were a tough sell in the midterms and didn’t deliver the victories that Republicans were hoping for.
Disconnects like these are why voters have so much scorn towards Washington. We want to see things fixed, not be fooled into thinking that everything has already been fixed. Ironically, this desire for authenticity or “straight talk” is what helped Trump get elected. Millions of Americans voted for him because they wanted a disruptor and someone to hold career politicians to account. Trump is now sounding more like a politician when he makes no differentiation between his economic perceptions and the realities faced by many of those who voted for him.
Keeping the focus on improving the economy is a winning strategy for President Trump and Republicans. Polls had shown that the economy was consistently a top issue during throughout Obama’s presidency. Since the 2016 election, it has been declining with healthcare ticking up, along with social/wedge issues like immigration and the 2nd Amendment. The 2018 national exit poll had healthcare as the most important issue, at 26%, followed by immigration at 23% and the economy at 19%. “Taxes” came in at just 4%, behind gun policy (8%), the environment (7%), terrorism (6%) and foreign policy (5%). Some of this is of course atmospheric and reactionary. Economic improvement over the last few years (as discussed above), can cause concerns to wane while other issues come to the forefront, such as Obamacare repeal or gun violence, which then in turn are atop voters’ minds. Nevertheless, this shift in priorities does not excuse tone deafness on the economy. This shift in issue priorities benefitted Democrats by bolstering their turnout and framing the midterms on an issue where they are perceived as more competent than Republicans.
A fall 2016 Gallup poll asked voters if they trusted Trump or Clinton more on key issues and our 2018 post Election survey gave voters a choice between President Trump and the Republicans and Speaker Pelosi, Leader Schumer and the Democrats on many of the same issues. Although not identical comparisons, they shed light on how voters’ preferences have changed between Republicans and Democrats to a certain degree. On the economy, Trump had a three-point advantage over Clinton in 2016 (50% to 47%) and that increased eight-points to +11 in 2018 over Democrats (55% to 44%). That improvement for Trump was more or less negated because the economy as an issue dropped in importance in two years. On healthcare, Trump trailed Clinton by 15-points (41% to 56%), which is nearly identical to where it was in the 2018 midterms when compared to the Democrats (41% to 57%). So Trump didn’t lose ground on the issue, but it cut against him because it became more salient and motivated Democrats to vote. The most detrimental to Trump, though, would be on the issue of taxes. He led Clinton by six-points (51% to 45%) and had the same six-point margin in 2018 (41% to 35%). Trump did not improve his advantage on a historically Republican issue even after passing the tax cuts, again demonstrating their low rate of return for Republicans electorally.
Even with an economy that has been imperially improving and feeling vindicated and wanting to stick it to Democrats, Trump should still force the issue and acknowledge the challenges many face. There is an affordability crisis in this country and no shortage of proposals that draw broad bipartisan support. For instance, another recent survey of ours found that 75% of voters support Trump’s paid parental leave, which calls for eight weeks of paid family leave for mothers and fathers. A January Harvard/Harris poll found 86% support for paid family leave along with 94% support for reducing the cost of prescription drugs, 90% support for workforce development and job training and 82% support for infrastructure improvements.
Numbers like those keep the base happy and give Trump opportunities to make inroads with the middle, which is his path to winning re-election next year. Declaring “Mission Accomplished’ has limited upside, as it seems like an alternative reality to many. Trump should be somewhere in between “Make the Economy Great Again” and “Keep the Economy Great.”
