Introduction

We hear a lot from Trump and his supporters about the great US economic growth that has resulted from his policies. Another talking point being made in opposition to another bailout bill: we don’t want to bail out poorly run large cities. What are the facts on these two issues?

Great Economic Growth

The question here is whether the growth is a result of Trump policies or simply a continuation of the recovery from the 2008 bank collapse. To address this, take a look at what has happened to GDP growth in real terms and unemployment rates using data from the International Monetary Fund.

Before Trump came to power in 2016, the economy was continuing to recover from the 2008 collapse:

Pre Trump

And what followed appeared to be a continuation of the recovery: GDP growth bounced around a bit, but look at the steady reduction in the unemployment rate. The conclusion? Economic growth under Trump was a continuation of the economic recovery from the 2008 collapse. If we want to be charitable to Trump we can say there is no evidence his policies did anything to reduce the rate of recovery.

Trump

 In passing, it is worth noting the questionable tax cut Trump got passed in 2017. It is questionable because at the US was then at full employment, and consequently, this stimulus was not needed. The Congressional Budget Office estimates that implementing the Act added an estimated $2.3 trillion to the national debt over ten years or about $1.9 trillion after taking into account macroeconomic feedback effects.

 Bailing Out Poorly Run Large Cities

 Most large cities are Democratic and have no use for Trump and his policies. So a common talking point among Republicans has been to say we should not bail out poorly run large cities. One way to guard against the bailouts would be to limit state and local aid to the revenue shortfalls this year versus last year.