Last night President Trump delivered his second State of the Union address before Congress. And within hours media outlets had already produced dozens of articles fact-checking the claims made by the president.
While fact-checking is an essential and necessary function, such articles are often justly criticized because they attempt to establish the veracity of claims that are subjective or require interpretation. This makes the task of fact-checking State of the Union addresses even more questionable since they always include a mixture of statements that are questionable or outright misleading. President Trump’s speech is certainly no exception.
Rather than provide another line-by-line fact check on the president’s economic claims, I thought it might be helpful to provide context (filtered, of course, through my own pro-market, pro-freedom Christian bias) and allow the reader to judge for themselves the significance and veracity of the claims.
Note: All statements in bold and italics are from the full text of Trump’s speech as delivered.
We have created 5.3 million new jobs, and, importantly, added 600,000 new manufacturing jobs, something which almost everyone said was impossible to do, but the fact is we are just getting started.
In 2011, Jay Carney, the press secretary for President Obama made one of the most honest statements ever made in D.C.
“The White House doesn’t create jobs,” Carney said, adding “the government, together — White House, Congress — creates policies that allow for greater job creation.”
Asked whether the White House could do more, Carney said “there is no silver bullet” to creating jobs — but he didn’t answer the question.
It would be more accurate had Carney said that the government can refuse to create policies that hinder job creation, but it’s close enough for government work.
When politicians promise to “create jobs” (other than government jobs) they are either being dishonest or attempting to take advantage of the gullibility of the American voter. And because voters believe the claim, we shift closer to a socialized economy.
Also, the claim of 600,000 new manufacturing jobs is an overstatement. The U.S. has added a net of 454,000 jobs manufacturing jobs since January 2017—comparable to the same numbers during the Obama administration.
“Wages are rising at the fastest pace in decades, and growing for blue-collar workers who I promised to fight for.”
Wages are indeed growing, but some of the rise is due to increases in state and local minimum wage laws. While minimum wage increases make the wage rates look more promising, they’ll have a long-term negative impact on the working class.
“Nearly 5 million Americans have been lifted off food stamps.”
The number of Americans on food stamps peaked in 2013 (47.6 million), and declined both throughout President Obama’s second term and President Trump’s tenure. In 2018, the number had dropped to 40.3 million.
As with several of the claims made in the speech, this figure is merely a correlation of economic expansion. When the economy is strong, fewer people remain on food stamps.
“The U.S. economy is growing almost twice as fast today as when I took office and we are considered far and away the hottest economy anywhere in the world, not even close.”
The rate of GDP growth when Trump took office was 1.8. In the third quarter of 2018, it was 3.4 percent. Not quite “twice as fast,” but a robust growth rate.
And the “hottest economy anywhere in the world” is not something anyone with even a rudimentary knowledge of global economics would take seriously. Dozens of countries have a much faster growth rate than the U.S.—which is to be expected since we are a mature market economy and not an emerging market nation.
“African American, Hispanic American, and Asian American unemployment have all reached their lowest levels ever recorded.”
Unemployment rates for all three groups have been falling since 2010, right after the Great Recession.
The unemployment rate for African Americans fell to 5.9 percent in May 2018, the lowest since the government started keeping track in 1972. (The lowest rate of unemployment for African American men—5.2 percent—occurred in December 1973.)
Unemployment for Hispanic Americans fell to it’s lowest point ever last October, when it reached 4.4 percent. Asian unemployment fell to a record low of 2.2 percent in May. But African American, Latino, and Asian unemployment have all increased this year. In January, African American unemployment rose back to 6.8 percent, Hispanic unemployment rose to 4.9 percent, and Asian unemployment rose to 3.1 percent.
“Unemployment for Americans with disabilities has also reached an all-time low.”
While it may be at an all-time low, the number is still shockingly high. Workers with disabilities are significantly less likely to find employment, even in a strong economy. Currently, the unemployment rate for Americans with disabilities is 9.8 percent—twice the rate of those without disabilities.
“Unemployment has reached the lowest rate in over half a century.”
The unemployment rate of 3.9 percent (December 2018) was also reached during the presidency of Bill Clinton in 2000—another period of strong economic growth.
“More people are working now than at any time in the history of our country, 157 million people at work.”
Because of the steady growth of the American population, this claim could be plausibly made by almost any president in U.S. history. The number that matters is not the total number of people employed but the number employed relative to the overall population. This is known as the employment-population ratio, and is currently at 60.6 percent.
“We passed a massive tax cut for working families and doubled the child tax credit.”
The increase in the child tax credit is indeed one of the most noteworthy policy achievements to come during Trump’s tenure (though it should be attributed to Republicans in Congress). The credit has a salutary effect on working-class families since it can substantially reduce the taxes they pay. As the Center on Budget and Policy Priorities notes, a couple with two qualifying children would owe $4,600 in taxes without the credit, they would owe $600 in taxes with it, because the credit would reduce their tax bill by $2,000 for each child.
“My administration has cut more regulations in a short period of time than any other administration during its entire tenure.”
Not even remotely true. While the Trump administration has indeed cut many regulations and slowed the pace of adopting new rules, they can’t match the cuts made during the Carter and Reagan administrations. There is much, much more the administration could do to remove unnecessary federal regulations.
“[W]e recently imposed tariffs on $250 billion of Chinese goods, and now our Treasury is receiving billions and billions of dollars.”
This is true: the Trump administration imposed tariffs and the result is that the American people have paid “billions and billions of dollars” to the Treasury in new taxes.
In 2019, U.S. households are projected to suffer losses equivalent to $2,357 per household (or $915 per person) in 2017 dollars because of these tariffs.
“Here, in the United States, we are alarmed by the new calls to adopt socialism in our country. America was founded on liberty and independence, and not government coercion, domination, and control. We are born free, and we will stay free. Tonight, we renew our resolve that America will never be a socialist country.”
While this is a great line, it’s undermined by Trump’s own policies. As I noted last year, there are currently two competing models of socialism in the U.S. The first is the democratic socialism represented by Bernie Sanders. The second type is the economic nationalism represented by Trump.
Both sides are attempting to be the heir of Franklin Roosevelt’s welfare state nationalism. Sanders is more overt about the connection. “Let me define for you, simply and straightforwardly, what democratic socialism means to me,” said Sanders in 2015. “It builds on what Franklin Delano Roosevelt said when he fought for guaranteed economic rights for all Americans.” But many of Trump’s economic policies are similar aligned with FDR vision of “economic rights.” Trump even admitted there was one area where he was aligned with Sanders: “We have one issue that’s very similar, and that’s trade,” Trump said in 2016. “He and I are similar in trade.”
Sanders and Trump—and their supporters—share much more in common, though, than just protectionist trade policy. Each side is collectivist and seeks to use the power of the federal government to advance the economic interest of the group over the individual. And when the individual is economically harmed by these protectionist policies, the federal will “protect” them by giving them “payment from government” (i.e., the profits earned by other Americans and collected by the government for redistribution).
This is why both Sanders and Trump, like FDR, want a federal government that is big enough and strong enough to control the economy. “Franklin Roosevelt’s nationalism was, first, a doctrine of federal centralization,” says Samuel H. Beer. “The principle of federal activism, which some have seen as the principal dividing line in American politics since the 1930s, was introduced by the New Deal.”
New Deal socialist believe free markets and free individuals are secondary to the national economic interest identified by the government. The individual is permitted to act only if it is in the interest of the collective.
Image source: WhiteHouse.gov